Correlation Between Ligao Foods and Zhongyin Babi
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By analyzing existing cross correlation between Ligao Foods CoLtd and Zhongyin Babi Food, you can compare the effects of market volatilities on Ligao Foods and Zhongyin Babi 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 Zhongyin Babi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligao Foods and Zhongyin Babi.
Diversification Opportunities for Ligao Foods and Zhongyin Babi
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ligao and Zhongyin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Ligao Foods CoLtd and Zhongyin Babi Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongyin Babi Food 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 Zhongyin Babi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongyin Babi Food has no effect on the direction of Ligao Foods i.e., Ligao Foods and Zhongyin Babi go up and down completely randomly.
Pair Corralation between Ligao Foods and Zhongyin Babi
Assuming the 90 days trading horizon Ligao Foods CoLtd is expected to generate 1.51 times more return on investment than Zhongyin Babi. However, Ligao Foods is 1.51 times more volatile than Zhongyin Babi Food. It trades about 0.02 of its potential returns per unit of risk. Zhongyin Babi Food is currently generating about 0.02 per unit of risk. If you would invest 3,387 in Ligao Foods CoLtd on August 28, 2024 and sell it today you would earn a total of 51.00 from holding Ligao Foods CoLtd or generate 1.51% 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. Zhongyin Babi Food
Performance |
| Timeline |
| Ligao Foods CoLtd |
| Zhongyin Babi Food |
Ligao Foods and Zhongyin Babi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligao Foods and Zhongyin Babi
The main advantage of trading using opposite Ligao Foods and Zhongyin Babi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligao Foods position performs unexpectedly, Zhongyin Babi 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 Zhongyin Babi will offset losses from the drop in Zhongyin Babi's long position.| Ligao Foods vs. China Petroleum Chemical | Ligao Foods vs. PetroChina Co Ltd | Ligao Foods vs. China State Construction | Ligao Foods vs. China Railway Group |
| Zhongyin Babi vs. China Petroleum Chemical | Zhongyin Babi vs. PetroChina Co Ltd | Zhongyin Babi vs. China State Construction | Zhongyin Babi vs. China Railway Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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