Correlation Between Lihtai Construction and Sunspring Metal
Can any of the company-specific risk be diversified away by investing in both Lihtai Construction and Sunspring Metal 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 Lihtai Construction and Sunspring Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lihtai Construction Enterprise and Sunspring Metal Corp, you can compare the effects of market volatilities on Lihtai Construction and Sunspring Metal 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 Lihtai Construction with a short position of Sunspring Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lihtai Construction and Sunspring Metal.
Diversification Opportunities for Lihtai Construction and Sunspring Metal
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lihtai and Sunspring is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lihtai Construction Enterprise and Sunspring Metal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunspring Metal Corp and Lihtai Construction 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 Lihtai Construction Enterprise are associated (or correlated) with Sunspring Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunspring Metal Corp has no effect on the direction of Lihtai Construction i.e., Lihtai Construction and Sunspring Metal go up and down completely randomly.
Pair Corralation between Lihtai Construction and Sunspring Metal
Assuming the 90 days trading horizon Lihtai Construction is expected to generate 4.99 times less return on investment than Sunspring Metal. But when comparing it to its historical volatility, Lihtai Construction Enterprise is 4.64 times less risky than Sunspring Metal. It trades about 0.02 of its potential returns per unit of risk. Sunspring Metal Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,960 in Sunspring Metal Corp on November 28, 2024 and sell it today you would earn a total of 155.00 from holding Sunspring Metal Corp or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lihtai Construction Enterprise vs. Sunspring Metal Corp
Performance |
| Timeline |
| Lihtai Construction |
| Sunspring Metal Corp |
Lihtai Construction and Sunspring Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lihtai Construction and Sunspring Metal
The main advantage of trading using opposite Lihtai Construction and Sunspring Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lihtai Construction position performs unexpectedly, Sunspring Metal 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 Sunspring Metal will offset losses from the drop in Sunspring Metal's long position.| Lihtai Construction vs. Ruentex Development Co | Lihtai Construction vs. Ruentex Industries | Lihtai Construction vs. Ruentex Engineering Construction | Lihtai Construction vs. Feng Tay Enterprises |
| Sunspring Metal vs. Chang Type Industrial | Sunspring Metal vs. Anderson Industrial Corp | Sunspring Metal vs. Klingon Aerospace | Sunspring Metal vs. Basso Industry Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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