Correlation Between Chengdu Kanghua and Luolai Home
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By analyzing existing cross correlation between Chengdu Kanghua Biological and Luolai Home Textile, you can compare the effects of market volatilities on Chengdu Kanghua 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 Chengdu Kanghua with a short position of Luolai Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Kanghua and Luolai Home.
Diversification Opportunities for Chengdu Kanghua and Luolai Home
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chengdu and Luolai is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Kanghua Biological 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 Chengdu Kanghua 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 Chengdu Kanghua Biological 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 Chengdu Kanghua i.e., Chengdu Kanghua and Luolai Home go up and down completely randomly.
Pair Corralation between Chengdu Kanghua and Luolai Home
Assuming the 90 days trading horizon Chengdu Kanghua Biological is expected to under-perform the Luolai Home. In addition to that, Chengdu Kanghua is 1.68 times more volatile than Luolai Home Textile. It trades about -0.02 of its total potential returns per unit of risk. Luolai Home Textile is currently generating about -0.01 per unit of volatility. If you would invest 963.00 in Luolai Home Textile on August 29, 2024 and sell it today you would lose (140.00) from holding Luolai Home Textile or give up 14.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu Kanghua Biological vs. Luolai Home Textile
Performance |
| Timeline |
| Chengdu Kanghua Biol |
| Luolai Home Textile |
Chengdu Kanghua and Luolai Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Kanghua and Luolai Home
The main advantage of trading using opposite Chengdu Kanghua and Luolai Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Kanghua 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.| Chengdu Kanghua vs. Industrial and Commercial | Chengdu Kanghua vs. China Construction Bank | Chengdu Kanghua vs. Agricultural Bank of | Chengdu Kanghua vs. Bank of China |
| Luolai Home vs. BeiGene | Luolai Home vs. Kweichow Moutai Co | Luolai Home vs. Beijing Roborock Technology | Luolai Home vs. G bits Network Technology |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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