Correlation Between Chongqing Shunbo and Lutian Machinery
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By analyzing existing cross correlation between Chongqing Shunbo Aluminum and Lutian Machinery Co, you can compare the effects of market volatilities on Chongqing Shunbo 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 Chongqing Shunbo with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Shunbo and Lutian Machinery.
Diversification Opportunities for Chongqing Shunbo and Lutian Machinery
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chongqing and Lutian is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Shunbo Aluminum and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Chongqing Shunbo 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 Chongqing Shunbo Aluminum 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 Chongqing Shunbo i.e., Chongqing Shunbo and Lutian Machinery go up and down completely randomly.
Pair Corralation between Chongqing Shunbo and Lutian Machinery
Assuming the 90 days trading horizon Chongqing Shunbo Aluminum is expected to under-perform the Lutian Machinery. In addition to that, Chongqing Shunbo is 1.25 times more volatile than Lutian Machinery Co. It trades about -0.17 of its total potential returns per unit of risk. Lutian Machinery Co is currently generating about -0.15 per unit of volatility. If you would invest 1,587 in Lutian Machinery Co on October 14, 2024 and sell it today you would lose (87.00) from holding Lutian Machinery Co or give up 5.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Shunbo Aluminum vs. Lutian Machinery Co
Performance |
| Timeline |
| Chongqing Shunbo Aluminum |
| Lutian Machinery |
Chongqing Shunbo and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Shunbo and Lutian Machinery
The main advantage of trading using opposite Chongqing Shunbo and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Shunbo 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.| Chongqing Shunbo vs. Shandong Homey Aquatic | Chongqing Shunbo vs. Vohringer Home Technology | Chongqing Shunbo vs. UE Furniture Co | Chongqing Shunbo vs. Luolai Home Textile |
| Lutian Machinery vs. Chongqing Shunbo Aluminum | Lutian Machinery vs. Rising Nonferrous Metals | Lutian Machinery vs. Shandong Hongchuang Aluminum | Lutian Machinery vs. Everdisplay Optronics Shanghai |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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