Correlation Between Beijing Jiaman and Lutian Machinery
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By analyzing existing cross correlation between Beijing Jiaman Dress and Lutian Machinery Co, you can compare the effects of market volatilities on Beijing Jiaman and Lutian Machinery 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 Beijing Jiaman with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Jiaman and Lutian Machinery.
Diversification Opportunities for Beijing Jiaman and Lutian Machinery
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Beijing and Lutian is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Jiaman Dress and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Beijing Jiaman 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 Beijing Jiaman Dress are associated (or correlated) with Lutian Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lutian Machinery has no effect on the direction of Beijing Jiaman i.e., Beijing Jiaman and Lutian Machinery go up and down completely randomly.
Pair Corralation between Beijing Jiaman and Lutian Machinery
Assuming the 90 days trading horizon Beijing Jiaman Dress is expected to under-perform the Lutian Machinery. In addition to that, Beijing Jiaman is 1.02 times more volatile than Lutian Machinery Co. It trades about -0.01 of its total potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.02 per unit of volatility. If you would invest 1,523 in Lutian Machinery Co on September 12, 2024 and sell it today you would earn a total of 46.00 from holding Lutian Machinery Co or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Jiaman Dress vs. Lutian Machinery Co
Performance |
| Timeline |
| Beijing Jiaman Dress |
| Lutian Machinery |
Beijing Jiaman and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Jiaman and Lutian Machinery
The main advantage of trading using opposite Beijing Jiaman and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Jiaman position performs unexpectedly, Lutian Machinery 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 Lutian Machinery will offset losses from the drop in Lutian Machinery's long position.| Beijing Jiaman vs. Lutian Machinery Co | Beijing Jiaman vs. PetroChina Co Ltd | Beijing Jiaman vs. Bank of China | Beijing Jiaman vs. Gansu Jiu Steel |
| Lutian Machinery vs. Agricultural Bank of | Lutian Machinery vs. Industrial and Commercial | Lutian Machinery vs. Bank of China | Lutian Machinery vs. PetroChina Co Ltd |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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