Correlation Between Ligao Foods and Zhongfu Information
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By analyzing existing cross correlation between Ligao Foods CoLtd and Zhongfu Information, you can compare the effects of market volatilities on Ligao Foods and Zhongfu Information 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 Zhongfu Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligao Foods and Zhongfu Information.
Diversification Opportunities for Ligao Foods and Zhongfu Information
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ligao and Zhongfu is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ligao Foods CoLtd and Zhongfu Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongfu Information 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 Zhongfu Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongfu Information has no effect on the direction of Ligao Foods i.e., Ligao Foods and Zhongfu Information go up and down completely randomly.
Pair Corralation between Ligao Foods and Zhongfu Information
Assuming the 90 days trading horizon Ligao Foods CoLtd is expected to generate 0.84 times more return on investment than Zhongfu Information. However, Ligao Foods CoLtd is 1.19 times less risky than Zhongfu Information. It trades about 0.35 of its potential returns per unit of risk. Zhongfu Information is currently generating about 0.22 per unit of risk. If you would invest 3,508 in Ligao Foods CoLtd on November 7, 2024 and sell it today you would earn a total of 516.00 from holding Ligao Foods CoLtd or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ligao Foods CoLtd vs. Zhongfu Information
Performance |
| Timeline |
| Ligao Foods CoLtd |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Zhongfu Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ligao Foods and Zhongfu Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligao Foods and Zhongfu Information
The main advantage of trading using opposite Ligao Foods and Zhongfu Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligao Foods position performs unexpectedly, Zhongfu Information 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 Zhongfu Information will offset losses from the drop in Zhongfu Information's long position.The idea behind Ligao Foods CoLtd and Zhongfu Information 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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