Correlation Between Chinese Maritime and Lihtai Construction
Can any of the company-specific risk be diversified away by investing in both Chinese Maritime and Lihtai Construction 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 Chinese Maritime and Lihtai Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chinese Maritime Transport and Lihtai Construction Enterprise, you can compare the effects of market volatilities on Chinese Maritime and Lihtai Construction 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 Chinese Maritime with a short position of Lihtai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Maritime and Lihtai Construction.
Diversification Opportunities for Chinese Maritime and Lihtai Construction
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chinese and Lihtai is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Maritime Transport and Lihtai Construction Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lihtai Construction and Chinese Maritime 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 Chinese Maritime Transport are associated (or correlated) with Lihtai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lihtai Construction has no effect on the direction of Chinese Maritime i.e., Chinese Maritime and Lihtai Construction go up and down completely randomly.
Pair Corralation between Chinese Maritime and Lihtai Construction
Assuming the 90 days trading horizon Chinese Maritime Transport is expected to under-perform the Lihtai Construction. In addition to that, Chinese Maritime is 3.43 times more volatile than Lihtai Construction Enterprise. It trades about -0.17 of its total potential returns per unit of risk. Lihtai Construction Enterprise is currently generating about -0.02 per unit of volatility. If you would invest 8,150 in Lihtai Construction Enterprise on October 14, 2024 and sell it today you would lose (10.00) from holding Lihtai Construction Enterprise or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chinese Maritime Transport vs. Lihtai Construction Enterprise
Performance |
| Timeline |
| Chinese Maritime Tra |
| Lihtai Construction |
Chinese Maritime and Lihtai Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chinese Maritime and Lihtai Construction
The main advantage of trading using opposite Chinese Maritime and Lihtai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chinese Maritime position performs unexpectedly, Lihtai Construction 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 Lihtai Construction will offset losses from the drop in Lihtai Construction's long position.| Chinese Maritime vs. U Ming Marine Transport | Chinese Maritime vs. Sincere Navigation Corp | Chinese Maritime vs. Taiwan Navigation Co | Chinese Maritime vs. Huaku Development Co |
| Lihtai Construction vs. Chinese Maritime Transport | Lihtai Construction vs. Chinese Gamer International | Lihtai Construction vs. Tehmag Foods | Lihtai Construction vs. Hunya Foods 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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