Correlation Between Oriental Union and Li Peng
Can any of the company-specific risk be diversified away by investing in both Oriental Union 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 Oriental Union and Li Peng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oriental Union Chemical and Li Peng Enterprise, you can compare the effects of market volatilities on Oriental Union 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 Oriental Union with a short position of Li Peng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Union and Li Peng.
Diversification Opportunities for Oriental Union and Li Peng
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oriental and 1447 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Union Chemical 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 Oriental Union 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 Oriental Union Chemical 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 Oriental Union i.e., Oriental Union and Li Peng go up and down completely randomly.
Pair Corralation between Oriental Union and Li Peng
Assuming the 90 days trading horizon Oriental Union Chemical is expected to under-perform the Li Peng. But the stock apears to be less risky and, when comparing its historical volatility, Oriental Union Chemical is 1.77 times less risky than Li Peng. The stock trades about -0.43 of its potential returns per unit of risk. The Li Peng Enterprise is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 810.00 in Li Peng Enterprise on August 28, 2024 and sell it today you would lose (26.00) from holding Li Peng Enterprise or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oriental Union Chemical vs. Li Peng Enterprise
Performance |
| Timeline |
| Oriental Union Chemical |
| Li Peng Enterprise |
Oriental Union and Li Peng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oriental Union and Li Peng
The main advantage of trading using opposite Oriental Union and Li Peng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Union 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.| Oriental Union vs. China Man Made Fiber | Oriental Union vs. Taiwan Styrene Monomer | Oriental Union vs. USI Corp | Oriental Union vs. China Petrochemical Development |
| Li Peng vs. Taiwan Semiconductor Manufacturing | Li Peng vs. Hon Hai Precision | Li Peng vs. MediaTek | Li Peng vs. Chunghwa Telecom 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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