Correlation Between Linzhou Heavy and Ningbo Homelink
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By analyzing existing cross correlation between Linzhou Heavy Machinery and Ningbo Homelink Eco iTech, you can compare the effects of market volatilities on Linzhou Heavy and Ningbo Homelink 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 Ningbo Homelink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linzhou Heavy and Ningbo Homelink.
Diversification Opportunities for Linzhou Heavy and Ningbo Homelink
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Linzhou and Ningbo is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Linzhou Heavy Machinery and Ningbo Homelink Eco iTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Homelink Eco 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 Ningbo Homelink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Homelink Eco has no effect on the direction of Linzhou Heavy i.e., Linzhou Heavy and Ningbo Homelink go up and down completely randomly.
Pair Corralation between Linzhou Heavy and Ningbo Homelink
Assuming the 90 days trading horizon Linzhou Heavy Machinery is expected to generate 0.87 times more return on investment than Ningbo Homelink. However, Linzhou Heavy Machinery is 1.15 times less risky than Ningbo Homelink. It trades about 0.24 of its potential returns per unit of risk. Ningbo Homelink Eco iTech is currently generating about -0.01 per unit of risk. If you would invest 357.00 in Linzhou Heavy Machinery on November 5, 2024 and sell it today you would earn a total of 26.00 from holding Linzhou Heavy Machinery or generate 7.28% 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. Ningbo Homelink Eco iTech
Performance |
| Timeline |
| Linzhou Heavy Machinery |
| Ningbo Homelink Eco |
Linzhou Heavy and Ningbo Homelink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linzhou Heavy and Ningbo Homelink
The main advantage of trading using opposite Linzhou Heavy and Ningbo Homelink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linzhou Heavy position performs unexpectedly, Ningbo Homelink 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 Ningbo Homelink will offset losses from the drop in Ningbo Homelink's long position.| Linzhou Heavy vs. Shenyang Chemical Industry | Linzhou Heavy vs. Hengyi Petrochemical Co | Linzhou Heavy vs. Everdisplay Optronics Shanghai | Linzhou Heavy vs. Shenzhen AV Display Co |
| Ningbo Homelink vs. Eastroc Beverage Group | Ningbo Homelink vs. Lier Chemical Co | Ningbo Homelink vs. HeBei Jinniu Chemical | Ningbo Homelink vs. Shenzhen Noposion Agrochemicals |
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 CEOs Directory module to screen CEOs from public companies around the world.
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