Correlation Between Guangzhou Tinci and Lier Chemical
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By analyzing existing cross correlation between Guangzhou Tinci Materials and Lier Chemical Co, you can compare the effects of market volatilities on Guangzhou Tinci and Lier 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 Guangzhou Tinci with a short position of Lier Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Tinci and Lier Chemical.
Diversification Opportunities for Guangzhou Tinci and Lier Chemical
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangzhou and Lier is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Tinci Materials and Lier Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lier Chemical and Guangzhou Tinci 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 Guangzhou Tinci Materials are associated (or correlated) with Lier Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lier Chemical has no effect on the direction of Guangzhou Tinci i.e., Guangzhou Tinci and Lier Chemical go up and down completely randomly.
Pair Corralation between Guangzhou Tinci and Lier Chemical
Assuming the 90 days trading horizon Guangzhou Tinci Materials is expected to generate 1.71 times more return on investment than Lier Chemical. However, Guangzhou Tinci is 1.71 times more volatile than Lier Chemical Co. It trades about 0.07 of its potential returns per unit of risk. Lier Chemical Co is currently generating about 0.05 per unit of risk. If you would invest 1,472 in Guangzhou Tinci Materials on November 7, 2024 and sell it today you would earn a total of 356.00 from holding Guangzhou Tinci Materials or generate 24.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Tinci Materials vs. Lier Chemical Co
Performance |
| Timeline |
| Guangzhou Tinci Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lier Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Guangzhou Tinci and Lier Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Tinci and Lier Chemical
The main advantage of trading using opposite Guangzhou Tinci and Lier Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Tinci position performs unexpectedly, Lier 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 Lier Chemical will offset losses from the drop in Lier Chemical's long position.The idea behind Guangzhou Tinci Materials and Lier Chemical Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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