Correlation Between Carnival Industrial and Li Peng
Can any of the company-specific risk be diversified away by investing in both Carnival Industrial and Li Peng 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 Carnival Industrial and Li Peng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival Industrial Corp and Li Peng Enterprise, you can compare the effects of market volatilities on Carnival Industrial and Li Peng 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 Carnival Industrial with a short position of Li Peng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Industrial and Li Peng.
Diversification Opportunities for Carnival Industrial and Li Peng
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carnival and 1447 is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Industrial Corp and Li Peng Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Peng Enterprise and Carnival Industrial 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 Carnival Industrial Corp are associated (or correlated) with Li Peng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Peng Enterprise has no effect on the direction of Carnival Industrial i.e., Carnival Industrial and Li Peng go up and down completely randomly.
Pair Corralation between Carnival Industrial and Li Peng
Assuming the 90 days trading horizon Carnival Industrial Corp is expected to under-perform the Li Peng. But the stock apears to be less risky and, when comparing its historical volatility, Carnival Industrial Corp is 1.54 times less risky than Li Peng. The stock trades about -0.1 of its potential returns per unit of risk. The Li Peng Enterprise is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 798.00 in Li Peng Enterprise on October 24, 2024 and sell it today you would lose (87.00) from holding Li Peng Enterprise or give up 10.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Carnival Industrial Corp vs. Li Peng Enterprise
Performance |
| Timeline |
| Carnival Industrial Corp |
| Li Peng Enterprise |
Carnival Industrial and Li Peng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival Industrial and Li Peng
The main advantage of trading using opposite Carnival Industrial and Li Peng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Industrial position performs unexpectedly, Li Peng 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 Li Peng will offset losses from the drop in Li Peng's long position.| Carnival Industrial vs. Feng Ching Metal | Carnival Industrial vs. China Metal Products | Carnival Industrial vs. SS Healthcare Holding | Carnival Industrial vs. Phytohealth Corp |
| Li Peng vs. Cathay Financial Holding | Li Peng vs. Shanghai Commercial Savings | Li Peng vs. Yuanta Financial Holdings | Li Peng vs. Unitech Computer 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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