Correlation Between Guangzhou Shangpin and Luolai Home
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By analyzing existing cross correlation between Guangzhou Shangpin Home and Luolai Home Textile, you can compare the effects of market volatilities on Guangzhou Shangpin and Luolai Home 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 Guangzhou Shangpin with a short position of Luolai Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Shangpin and Luolai Home.
Diversification Opportunities for Guangzhou Shangpin and Luolai Home
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangzhou and Luolai is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Shangpin Home and Luolai Home Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luolai Home Textile and Guangzhou Shangpin 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 Guangzhou Shangpin Home are associated (or correlated) with Luolai Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luolai Home Textile has no effect on the direction of Guangzhou Shangpin i.e., Guangzhou Shangpin and Luolai Home go up and down completely randomly.
Pair Corralation between Guangzhou Shangpin and Luolai Home
Assuming the 90 days trading horizon Guangzhou Shangpin Home is expected to generate 1.85 times more return on investment than Luolai Home. However, Guangzhou Shangpin is 1.85 times more volatile than Luolai Home Textile. It trades about 0.17 of its potential returns per unit of risk. Luolai Home Textile is currently generating about 0.2 per unit of risk. If you would invest 963.00 in Guangzhou Shangpin Home on August 31, 2024 and sell it today you would earn a total of 500.00 from holding Guangzhou Shangpin Home or generate 51.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Shangpin Home vs. Luolai Home Textile
Performance |
| Timeline |
| Guangzhou Shangpin Home |
| Luolai Home Textile |
Guangzhou Shangpin and Luolai Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Shangpin and Luolai Home
The main advantage of trading using opposite Guangzhou Shangpin and Luolai Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Shangpin position performs unexpectedly, Luolai Home 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 Luolai Home will offset losses from the drop in Luolai Home's long position.| Guangzhou Shangpin vs. China State Construction | Guangzhou Shangpin vs. China Merchants Shekou | Guangzhou Shangpin vs. Huafa Industrial Co | Guangzhou Shangpin vs. China International Capital |
| Luolai Home vs. China State Construction | Luolai Home vs. China Merchants Shekou | Luolai Home vs. Huafa Industrial Co | Luolai Home vs. China International Capital |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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