Correlation Between Linzhou Heavy and Dongjiang Environmental
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By analyzing existing cross correlation between Linzhou Heavy Machinery and Dongjiang Environmental Co, you can compare the effects of market volatilities on Linzhou Heavy and Dongjiang Environmental 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 Dongjiang Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linzhou Heavy and Dongjiang Environmental.
Diversification Opportunities for Linzhou Heavy and Dongjiang Environmental
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Linzhou and Dongjiang is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Linzhou Heavy Machinery and Dongjiang Environmental Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongjiang Environmental 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 Dongjiang Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongjiang Environmental has no effect on the direction of Linzhou Heavy i.e., Linzhou Heavy and Dongjiang Environmental go up and down completely randomly.
Pair Corralation between Linzhou Heavy and Dongjiang Environmental
Assuming the 90 days trading horizon Linzhou Heavy Machinery is expected to generate 1.14 times more return on investment than Dongjiang Environmental. However, Linzhou Heavy is 1.14 times more volatile than Dongjiang Environmental Co. It trades about 0.0 of its potential returns per unit of risk. Dongjiang Environmental Co is currently generating about -0.01 per unit of risk. If you would invest 508.00 in Linzhou Heavy Machinery on September 14, 2024 and sell it today you would lose (49.00) from holding Linzhou Heavy Machinery or give up 9.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linzhou Heavy Machinery vs. Dongjiang Environmental Co
Performance |
| Timeline |
| Linzhou Heavy Machinery |
| Dongjiang Environmental |
Linzhou Heavy and Dongjiang Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linzhou Heavy and Dongjiang Environmental
The main advantage of trading using opposite Linzhou Heavy and Dongjiang Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linzhou Heavy position performs unexpectedly, Dongjiang Environmental 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 Dongjiang Environmental will offset losses from the drop in Dongjiang Environmental'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 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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