Correlation Between Guangdong Wens and Lingyuan Iron
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By analyzing existing cross correlation between Guangdong Wens Foodstuff and Lingyuan Iron Steel, you can compare the effects of market volatilities on Guangdong Wens and Lingyuan Iron 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 Guangdong Wens with a short position of Lingyuan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Wens and Lingyuan Iron.
Diversification Opportunities for Guangdong Wens and Lingyuan Iron
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guangdong and Lingyuan is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Wens Foodstuff and Lingyuan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lingyuan Iron Steel and Guangdong Wens 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 Guangdong Wens Foodstuff are associated (or correlated) with Lingyuan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lingyuan Iron Steel has no effect on the direction of Guangdong Wens i.e., Guangdong Wens and Lingyuan Iron go up and down completely randomly.
Pair Corralation between Guangdong Wens and Lingyuan Iron
Assuming the 90 days trading horizon Guangdong Wens Foodstuff is expected to generate 0.83 times more return on investment than Lingyuan Iron. However, Guangdong Wens Foodstuff is 1.21 times less risky than Lingyuan Iron. It trades about 0.02 of its potential returns per unit of risk. Lingyuan Iron Steel is currently generating about 0.0 per unit of risk. If you would invest 1,665 in Guangdong Wens Foodstuff on September 12, 2024 and sell it today you would earn a total of 58.00 from holding Guangdong Wens Foodstuff or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Wens Foodstuff vs. Lingyuan Iron Steel
Performance |
| Timeline |
| Guangdong Wens Foodstuff |
| Lingyuan Iron Steel |
Guangdong Wens and Lingyuan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Wens and Lingyuan Iron
The main advantage of trading using opposite Guangdong Wens and Lingyuan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Wens position performs unexpectedly, Lingyuan Iron 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 Lingyuan Iron will offset losses from the drop in Lingyuan Iron's long position.| Guangdong Wens vs. China Petroleum Chemical | Guangdong Wens vs. PetroChina Co Ltd | Guangdong Wens vs. China State Construction | Guangdong Wens vs. China Railway Group |
| Lingyuan Iron vs. Zijin Mining Group | Lingyuan Iron vs. Wanhua Chemical Group | Lingyuan Iron vs. Baoshan Iron Steel | Lingyuan Iron vs. Rongsheng Petrochemical 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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