Correlation Between Lihtai Construction and Trade Van
Can any of the company-specific risk be diversified away by investing in both Lihtai Construction and Trade Van 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 Trade Van 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 Trade Van Information Services, you can compare the effects of market volatilities on Lihtai Construction and Trade Van 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 Trade Van. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lihtai Construction and Trade Van.
Diversification Opportunities for Lihtai Construction and Trade Van
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lihtai and Trade is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lihtai Construction Enterprise and Trade Van Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Van Information 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 Trade Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Van Information has no effect on the direction of Lihtai Construction i.e., Lihtai Construction and Trade Van go up and down completely randomly.
Pair Corralation between Lihtai Construction and Trade Van
Assuming the 90 days trading horizon Lihtai Construction Enterprise is expected to generate 1.82 times more return on investment than Trade Van. However, Lihtai Construction is 1.82 times more volatile than Trade Van Information Services. It trades about 0.07 of its potential returns per unit of risk. Trade Van Information Services is currently generating about 0.1 per unit of risk. If you would invest 5,322 in Lihtai Construction Enterprise on October 25, 2024 and sell it today you would earn a total of 2,908 from holding Lihtai Construction Enterprise or generate 54.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lihtai Construction Enterprise vs. Trade Van Information Services
Performance |
| Timeline |
| Lihtai Construction |
| Trade Van Information |
Lihtai Construction and Trade Van Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lihtai Construction and Trade Van
The main advantage of trading using opposite Lihtai Construction and Trade Van positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lihtai Construction position performs unexpectedly, Trade Van 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 Trade Van will offset losses from the drop in Trade Van's long position.| Lihtai Construction vs. China Times Publishing | Lihtai Construction vs. Hannstar Display Corp | Lihtai Construction vs. Pacific Construction Co | Lihtai Construction vs. PlayNitride |
| Trade Van vs. Taiwan Sakura Corp | Trade Van vs. Charoen Pokphand Enterprise | Trade Van vs. Taiwan Cogeneration Corp | Trade Van vs. Taiwan Secom Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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