Correlation Between Linzhou Heavy and Allied Machinery
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By analyzing existing cross correlation between Linzhou Heavy Machinery and Allied Machinery Co, you can compare the effects of market volatilities on Linzhou Heavy and Allied Machinery 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 Allied Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linzhou Heavy and Allied Machinery.
Diversification Opportunities for Linzhou Heavy and Allied Machinery
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Linzhou and Allied is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Linzhou Heavy Machinery and Allied Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Machinery 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 Allied Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Machinery has no effect on the direction of Linzhou Heavy i.e., Linzhou Heavy and Allied Machinery go up and down completely randomly.
Pair Corralation between Linzhou Heavy and Allied Machinery
Assuming the 90 days trading horizon Linzhou Heavy Machinery is expected to generate 1.25 times more return on investment than Allied Machinery. However, Linzhou Heavy is 1.25 times more volatile than Allied Machinery Co. It trades about 0.02 of its potential returns per unit of risk. Allied Machinery Co is currently generating about -0.09 per unit of risk. If you would invest 393.00 in Linzhou Heavy Machinery on September 28, 2024 and sell it today you would earn a total of 0.00 from holding Linzhou Heavy Machinery or generate 0.0% 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. Allied Machinery Co
Performance |
| Timeline |
| Linzhou Heavy Machinery |
| Allied Machinery |
Linzhou Heavy and Allied Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linzhou Heavy and Allied Machinery
The main advantage of trading using opposite Linzhou Heavy and Allied Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linzhou Heavy position performs unexpectedly, Allied Machinery 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 Allied Machinery will offset losses from the drop in Allied Machinery's long position.| Linzhou Heavy vs. Bank of China | Linzhou Heavy vs. Kweichow Moutai Co | Linzhou Heavy vs. PetroChina Co Ltd | Linzhou Heavy vs. Bank of Communications |
| Allied Machinery vs. Bank of China | Allied Machinery vs. Kweichow Moutai Co | Allied Machinery vs. PetroChina Co Ltd | Allied Machinery vs. Bank of Communications |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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