Correlation Between Sun Sea and Lihtai Construction
Can any of the company-specific risk be diversified away by investing in both Sun Sea and Lihtai Construction at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sun Sea and Lihtai Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Sea Construction and Lihtai Construction Enterprise, you can compare the effects of market volatilities on Sun Sea and Lihtai Construction 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 Sun Sea with a short position of Lihtai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Sea and Lihtai Construction.
Diversification Opportunities for Sun Sea and Lihtai Construction
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sun and Lihtai is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sun Sea Construction and Lihtai Construction Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lihtai Construction and Sun Sea 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 Sun Sea Construction are associated (or correlated) with Lihtai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lihtai Construction has no effect on the direction of Sun Sea i.e., Sun Sea and Lihtai Construction go up and down completely randomly.
Pair Corralation between Sun Sea and Lihtai Construction
Assuming the 90 days trading horizon Sun Sea Construction is expected to generate 6.8 times more return on investment than Lihtai Construction. However, Sun Sea is 6.8 times more volatile than Lihtai Construction Enterprise. It trades about 0.03 of its potential returns per unit of risk. Lihtai Construction Enterprise is currently generating about -0.18 per unit of risk. If you would invest 1,815 in Sun Sea Construction on October 23, 2024 and sell it today you would earn a total of 15.00 from holding Sun Sea Construction or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Sea Construction vs. Lihtai Construction Enterprise
Performance |
| Timeline |
| Sun Sea Construction |
| Lihtai Construction |
Sun Sea and Lihtai Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Sea and Lihtai Construction
The main advantage of trading using opposite Sun Sea and Lihtai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Sea position performs unexpectedly, Lihtai Construction 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 Lihtai Construction will offset losses from the drop in Lihtai Construction's long position.| Sun Sea vs. Thinking Electronic Industrial | Sun Sea vs. Orient Semiconductor Electronics | Sun Sea vs. Vanguard International Semiconductor | Sun Sea vs. C Media Electronics |
| Lihtai Construction vs. Ibase Gaming | Lihtai Construction vs. DingZing Advanced Materials | Lihtai Construction vs. International Games System | Lihtai Construction vs. Golden Biotechnology |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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