Correlation Between Masterwork Machinery and LianChuang Electronic
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By analyzing existing cross correlation between Masterwork Machinery and LianChuang Electronic Technology, you can compare the effects of market volatilities on Masterwork Machinery and LianChuang Electronic 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 Masterwork Machinery with a short position of LianChuang Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masterwork Machinery and LianChuang Electronic.
Diversification Opportunities for Masterwork Machinery and LianChuang Electronic
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Masterwork and LianChuang is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Masterwork Machinery and LianChuang Electronic Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LianChuang Electronic and Masterwork Machinery 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 Masterwork Machinery are associated (or correlated) with LianChuang Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LianChuang Electronic has no effect on the direction of Masterwork Machinery i.e., Masterwork Machinery and LianChuang Electronic go up and down completely randomly.
Pair Corralation between Masterwork Machinery and LianChuang Electronic
Assuming the 90 days trading horizon Masterwork Machinery is expected to generate 1.04 times more return on investment than LianChuang Electronic. However, Masterwork Machinery is 1.04 times more volatile than LianChuang Electronic Technology. It trades about 0.2 of its potential returns per unit of risk. LianChuang Electronic Technology is currently generating about 0.08 per unit of risk. If you would invest 514.00 in Masterwork Machinery on November 7, 2024 and sell it today you would earn a total of 46.00 from holding Masterwork Machinery or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Masterwork Machinery vs. LianChuang Electronic Technolo
Performance |
| Timeline |
| Masterwork Machinery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| LianChuang Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Masterwork Machinery and LianChuang Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masterwork Machinery and LianChuang Electronic
The main advantage of trading using opposite Masterwork Machinery and LianChuang Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masterwork Machinery position performs unexpectedly, LianChuang Electronic 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 LianChuang Electronic will offset losses from the drop in LianChuang Electronic's long position.The idea behind Masterwork Machinery and LianChuang Electronic Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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