Correlation Between Linzhou Heavy and Eastern Communications
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By analyzing existing cross correlation between Linzhou Heavy Machinery and Eastern Communications Co, you can compare the effects of market volatilities on Linzhou Heavy and Eastern Communications 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 Eastern Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linzhou Heavy and Eastern Communications.
Diversification Opportunities for Linzhou Heavy and Eastern Communications
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Linzhou and Eastern is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Linzhou Heavy Machinery and Eastern Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Communications 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 Eastern Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Communications has no effect on the direction of Linzhou Heavy i.e., Linzhou Heavy and Eastern Communications go up and down completely randomly.
Pair Corralation between Linzhou Heavy and Eastern Communications
Assuming the 90 days trading horizon Linzhou Heavy Machinery is expected to under-perform the Eastern Communications. But the stock apears to be less risky and, when comparing its historical volatility, Linzhou Heavy Machinery is 1.1 times less risky than Eastern Communications. The stock trades about -0.02 of its potential returns per unit of risk. The Eastern Communications Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Eastern Communications Co on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Eastern Communications Co or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linzhou Heavy Machinery vs. Eastern Communications Co
Performance |
| Timeline |
| Linzhou Heavy Machinery |
| Eastern Communications |
Linzhou Heavy and Eastern Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linzhou Heavy and Eastern Communications
The main advantage of trading using opposite Linzhou Heavy and Eastern Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linzhou Heavy position performs unexpectedly, Eastern Communications 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 Eastern Communications will offset losses from the drop in Eastern Communications' long position.| Linzhou Heavy vs. Jinling Hotel Corp | Linzhou Heavy vs. Guangzhou Dongfang Hotel | Linzhou Heavy vs. Chengtun Mining Group | Linzhou Heavy vs. Shenyang Huitian Thermal |
| Eastern Communications vs. China Sports Industry | Eastern Communications vs. Linzhou Heavy Machinery | Eastern Communications vs. Anhui Huilong Agricultural | Eastern Communications vs. Lutian Machinery Co |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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