Correlation Between Linzhou Heavy and Xinxiang Chemical
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By analyzing existing cross correlation between Linzhou Heavy Machinery and Xinxiang Chemical Fiber, you can compare the effects of market volatilities on Linzhou Heavy and Xinxiang Chemical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Linzhou Heavy with a short position of Xinxiang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linzhou Heavy and Xinxiang Chemical.
Diversification Opportunities for Linzhou Heavy and Xinxiang Chemical
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Linzhou and Xinxiang is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Linzhou Heavy Machinery and Xinxiang Chemical Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinxiang Chemical Fiber and Linzhou Heavy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Linzhou Heavy Machinery are associated (or correlated) with Xinxiang Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinxiang Chemical Fiber has no effect on the direction of Linzhou Heavy i.e., Linzhou Heavy and Xinxiang Chemical go up and down completely randomly.
Pair Corralation between Linzhou Heavy and Xinxiang Chemical
Assuming the 90 days trading horizon Linzhou Heavy is expected to generate 1.36 times less return on investment than Xinxiang Chemical. But when comparing it to its historical volatility, Linzhou Heavy Machinery is 1.71 times less risky than Xinxiang Chemical. It trades about 0.23 of its potential returns per unit of risk. Xinxiang Chemical Fiber is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 393.00 in Xinxiang Chemical Fiber on September 14, 2024 and sell it today you would earn a total of 76.00 from holding Xinxiang Chemical Fiber or generate 19.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linzhou Heavy Machinery vs. Xinxiang Chemical Fiber
Performance |
| Timeline |
| Linzhou Heavy Machinery |
| Xinxiang Chemical Fiber |
Linzhou Heavy and Xinxiang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linzhou Heavy and Xinxiang Chemical
The main advantage of trading using opposite Linzhou Heavy and Xinxiang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linzhou Heavy position performs unexpectedly, Xinxiang Chemical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Xinxiang Chemical will offset losses from the drop in Xinxiang Chemical's long position.| Linzhou Heavy vs. Soyea Technology Co | Linzhou Heavy vs. Dr Peng Telecom | Linzhou Heavy vs. Guangdong Shenglu Telecommunication | Linzhou Heavy vs. Jiujiang Shanshui Technology |
| Xinxiang Chemical vs. Luyin Investment Group | Xinxiang Chemical vs. Anji Foodstuff Co | Xinxiang Chemical vs. Beijing Sanyuan Foods | Xinxiang Chemical vs. Tieling Newcity Investment |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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