Correlation Between Ligao Foods and Xiangyang Automobile
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By analyzing existing cross correlation between Ligao Foods CoLtd and Xiangyang Automobile Bearing, you can compare the effects of market volatilities on Ligao Foods and Xiangyang Automobile 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 Ligao Foods with a short position of Xiangyang Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligao Foods and Xiangyang Automobile.
Diversification Opportunities for Ligao Foods and Xiangyang Automobile
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ligao and Xiangyang is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ligao Foods CoLtd and Xiangyang Automobile Bearing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangyang Automobile and Ligao Foods 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 Ligao Foods CoLtd are associated (or correlated) with Xiangyang Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangyang Automobile has no effect on the direction of Ligao Foods i.e., Ligao Foods and Xiangyang Automobile go up and down completely randomly.
Pair Corralation between Ligao Foods and Xiangyang Automobile
Assuming the 90 days trading horizon Ligao Foods CoLtd is expected to under-perform the Xiangyang Automobile. But the stock apears to be less risky and, when comparing its historical volatility, Ligao Foods CoLtd is 1.32 times less risky than Xiangyang Automobile. The stock trades about -0.09 of its potential returns per unit of risk. The Xiangyang Automobile Bearing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 552.00 in Xiangyang Automobile Bearing on August 25, 2024 and sell it today you would earn a total of 30.00 from holding Xiangyang Automobile Bearing or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ligao Foods CoLtd vs. Xiangyang Automobile Bearing
Performance |
| Timeline |
| Ligao Foods CoLtd |
| Xiangyang Automobile |
Ligao Foods and Xiangyang Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligao Foods and Xiangyang Automobile
The main advantage of trading using opposite Ligao Foods and Xiangyang Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligao Foods position performs unexpectedly, Xiangyang Automobile 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 Xiangyang Automobile will offset losses from the drop in Xiangyang Automobile's long position.| Ligao Foods vs. China Railway Construction | Ligao Foods vs. Focus Media Information | Ligao Foods vs. Long Yuan Construction | Ligao Foods vs. Ningbo Construction Co |
| Xiangyang Automobile vs. Hainan Haiqi Transportation | Xiangyang Automobile vs. China Sports Industry | Xiangyang Automobile vs. Guangdong Brandmax Marketing | Xiangyang Automobile vs. Yindu Kitchen Equipment |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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