Correlation Between Sanyang and Lu Hai
Can any of the company-specific risk be diversified away by investing in both Sanyang and Lu Hai 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 Sanyang and Lu Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanyang Motor Co and Lu Hai Holding, you can compare the effects of market volatilities on Sanyang and Lu Hai 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 Sanyang with a short position of Lu Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyang and Lu Hai.
Diversification Opportunities for Sanyang and Lu Hai
Very weak diversification
The 3 months correlation between Sanyang and 2115 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sanyang Motor Co and Lu Hai Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lu Hai Holding and Sanyang 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 Sanyang Motor Co are associated (or correlated) with Lu Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lu Hai Holding has no effect on the direction of Sanyang i.e., Sanyang and Lu Hai go up and down completely randomly.
Pair Corralation between Sanyang and Lu Hai
Assuming the 90 days trading horizon Sanyang Motor Co is expected to generate 0.76 times more return on investment than Lu Hai. However, Sanyang Motor Co is 1.32 times less risky than Lu Hai. It trades about 0.0 of its potential returns per unit of risk. Lu Hai Holding is currently generating about -0.14 per unit of risk. If you would invest 7,090 in Sanyang Motor Co on January 16, 2025 and sell it today you would lose (50.00) from holding Sanyang Motor Co or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Sanyang Motor Co vs. Lu Hai Holding
Performance |
| Timeline |
| Sanyang Motor |
| Lu Hai Holding |
Sanyang and Lu Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyang and Lu Hai
The main advantage of trading using opposite Sanyang and Lu Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyang position performs unexpectedly, Lu Hai 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 Lu Hai will offset losses from the drop in Lu Hai's long position.| Sanyang vs. Yulon Motor Co | Sanyang vs. Nankang Rubber Tire | Sanyang vs. Oriental Union Chemical | Sanyang vs. Taiwan Glass Ind |
| Lu Hai vs. Chunghwa Chemical Synthesis | Lu Hai vs. Sanyang Motor Co | Lu Hai vs. Turvo International Co | Lu Hai vs. Iron Force Industrial |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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