Correlation Between Great Wall and Lily Textile
Can any of the company-specific risk be diversified away by investing in both Great Wall and Lily Textile at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Great Wall and Lily Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Lily Textile Co, you can compare the effects of market volatilities on Great Wall and Lily Textile 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 Great Wall with a short position of Lily Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Lily Textile.
Diversification Opportunities for Great Wall and Lily Textile
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Great and Lily is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Lily Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lily Textile and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Lily Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lily Textile has no effect on the direction of Great Wall i.e., Great Wall and Lily Textile go up and down completely randomly.
Pair Corralation between Great Wall and Lily Textile
Assuming the 90 days trading horizon Great Wall Enterprise is expected to generate 0.43 times more return on investment than Lily Textile. However, Great Wall Enterprise is 2.34 times less risky than Lily Textile. It trades about 0.31 of its potential returns per unit of risk. Lily Textile Co is currently generating about -0.1 per unit of risk. If you would invest 5,120 in Great Wall Enterprise on September 1, 2024 and sell it today you would earn a total of 210.00 from holding Great Wall Enterprise or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Lily Textile Co
Performance |
| Timeline |
| Great Wall Enterprise |
| Lily Textile |
Great Wall and Lily Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Lily Textile
The main advantage of trading using opposite Great Wall and Lily Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Lily Textile 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 Lily Textile will offset losses from the drop in Lily Textile's long position.| Great Wall vs. De Licacy Industrial | Great Wall vs. Wisher Industrial Co | Great Wall vs. Tainan Enterprises Co |
| Lily Textile vs. Chaintech Technology Corp | Lily Textile vs. AVerMedia Technologies | Lily Textile vs. Avision | Lily Textile vs. Clevo 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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