Correlation Between Zhejiang Construction and Lutian Machinery
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By analyzing existing cross correlation between Zhejiang Construction Investment and Lutian Machinery Co, you can compare the effects of market volatilities on Zhejiang Construction and Lutian 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 Zhejiang Construction with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Construction and Lutian Machinery.
Diversification Opportunities for Zhejiang Construction and Lutian Machinery
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zhejiang and Lutian is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Construction Investme and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Zhejiang Construction 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 Zhejiang Construction Investment are associated (or correlated) with Lutian Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lutian Machinery has no effect on the direction of Zhejiang Construction i.e., Zhejiang Construction and Lutian Machinery go up and down completely randomly.
Pair Corralation between Zhejiang Construction and Lutian Machinery
Assuming the 90 days trading horizon Zhejiang Construction Investment is expected to generate 1.56 times more return on investment than Lutian Machinery. However, Zhejiang Construction is 1.56 times more volatile than Lutian Machinery Co. It trades about 0.08 of its potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.07 per unit of risk. If you would invest 833.00 in Zhejiang Construction Investment on September 13, 2024 and sell it today you would earn a total of 236.00 from holding Zhejiang Construction Investment or generate 28.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.17% |
| Values | Daily Returns |
Zhejiang Construction Investme vs. Lutian Machinery Co
Performance |
| Timeline |
| Zhejiang Construction |
| Lutian Machinery |
Zhejiang Construction and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhejiang Construction and Lutian Machinery
The main advantage of trading using opposite Zhejiang Construction and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Construction position performs unexpectedly, Lutian 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 Lutian Machinery will offset losses from the drop in Lutian Machinery's long position.| Zhejiang Construction vs. Lutian Machinery Co | Zhejiang Construction vs. China Longyuan Power | Zhejiang Construction vs. PetroChina Co Ltd | Zhejiang Construction vs. Bank of China |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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