Correlation Between Super-Dragon Engineering and Ligao Foods
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By analyzing existing cross correlation between Super Dragon Engineering Plastics and Ligao Foods CoLtd, you can compare the effects of market volatilities on Super-Dragon Engineering and Ligao Foods 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 Super-Dragon Engineering with a short position of Ligao Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super-Dragon Engineering and Ligao Foods.
Diversification Opportunities for Super-Dragon Engineering and Ligao Foods
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Super-Dragon and Ligao is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Super Dragon Engineering Plast and Ligao Foods CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligao Foods CoLtd and Super-Dragon Engineering 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 Super Dragon Engineering Plastics are associated (or correlated) with Ligao Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligao Foods CoLtd has no effect on the direction of Super-Dragon Engineering i.e., Super-Dragon Engineering and Ligao Foods go up and down completely randomly.
Pair Corralation between Super-Dragon Engineering and Ligao Foods
Assuming the 90 days trading horizon Super-Dragon Engineering is expected to generate 1.92 times less return on investment than Ligao Foods. But when comparing it to its historical volatility, Super Dragon Engineering Plastics is 1.19 times less risky than Ligao Foods. It trades about 0.14 of its potential returns per unit of risk. Ligao Foods CoLtd is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,331 in Ligao Foods CoLtd on September 2, 2024 and sell it today you would earn a total of 1,613 from holding Ligao Foods CoLtd or generate 69.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Super Dragon Engineering Plast vs. Ligao Foods CoLtd
Performance |
| Timeline |
| Super-Dragon Engineering |
| Ligao Foods CoLtd |
Super-Dragon Engineering and Ligao Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super-Dragon Engineering and Ligao Foods
The main advantage of trading using opposite Super-Dragon Engineering and Ligao Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super-Dragon Engineering position performs unexpectedly, Ligao Foods 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 Ligao Foods will offset losses from the drop in Ligao Foods' long position.The idea behind Super Dragon Engineering Plastics and Ligao Foods CoLtd 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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