Correlation Between Lihtai Construction and Provision Information
Can any of the company-specific risk be diversified away by investing in both Lihtai Construction and Provision Information 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 Provision Information 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 Provision Information CoLtd, you can compare the effects of market volatilities on Lihtai Construction and Provision Information 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 Provision Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lihtai Construction and Provision Information.
Diversification Opportunities for Lihtai Construction and Provision Information
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lihtai and Provision is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lihtai Construction Enterprise and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision 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 Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of Lihtai Construction i.e., Lihtai Construction and Provision Information go up and down completely randomly.
Pair Corralation between Lihtai Construction and Provision Information
Assuming the 90 days trading horizon Lihtai Construction Enterprise is expected to generate 0.53 times more return on investment than Provision Information. However, Lihtai Construction Enterprise is 1.89 times less risky than Provision Information. It trades about 0.04 of its potential returns per unit of risk. Provision Information CoLtd is currently generating about -0.08 per unit of risk. If you would invest 7,750 in Lihtai Construction Enterprise on October 25, 2024 and sell it today you would earn a total of 480.00 from holding Lihtai Construction Enterprise or generate 6.19% 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. Provision Information CoLtd
Performance |
| Timeline |
| Lihtai Construction |
| Provision Information |
Lihtai Construction and Provision Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lihtai Construction and Provision Information
The main advantage of trading using opposite Lihtai Construction and Provision Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lihtai Construction position performs unexpectedly, Provision Information 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 Provision Information will offset losses from the drop in Provision Information'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 |
| Provision Information vs. Grand Plastic Technology | Provision Information vs. HOYA Resort Hotel | Provision Information vs. Solar Applied Materials | Provision Information vs. DingZing Advanced Materials |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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