Correlation Between Lungyen Life and Eternal Materials
Can any of the company-specific risk be diversified away by investing in both Lungyen Life and Eternal Materials 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 Lungyen Life and Eternal Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lungyen Life Service and Eternal Materials Co, you can compare the effects of market volatilities on Lungyen Life and Eternal Materials 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 Lungyen Life with a short position of Eternal Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lungyen Life and Eternal Materials.
Diversification Opportunities for Lungyen Life and Eternal Materials
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lungyen and Eternal is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lungyen Life Service and Eternal Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternal Materials and Lungyen Life 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 Lungyen Life Service are associated (or correlated) with Eternal Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternal Materials has no effect on the direction of Lungyen Life i.e., Lungyen Life and Eternal Materials go up and down completely randomly.
Pair Corralation between Lungyen Life and Eternal Materials
Assuming the 90 days trading horizon Lungyen Life Service is expected to under-perform the Eternal Materials. But the stock apears to be less risky and, when comparing its historical volatility, Lungyen Life Service is 1.07 times less risky than Eternal Materials. The stock trades about -0.15 of its potential returns per unit of risk. The Eternal Materials Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,770 in Eternal Materials Co on November 2, 2024 and sell it today you would earn a total of 65.00 from holding Eternal Materials Co or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lungyen Life Service vs. Eternal Materials Co
Performance |
| Timeline |
| Lungyen Life Service |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Eternal Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lungyen Life and Eternal Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lungyen Life and Eternal Materials
The main advantage of trading using opposite Lungyen Life and Eternal Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lungyen Life position performs unexpectedly, Eternal Materials 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 Eternal Materials will offset losses from the drop in Eternal Materials' long position.The idea behind Lungyen Life Service and Eternal Materials Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |