Correlation Between China Sports and Lutian Machinery
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By analyzing existing cross correlation between China Sports Industry and Lutian Machinery Co, you can compare the effects of market volatilities on China Sports and Lutian Machinery 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 China Sports with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Sports and Lutian Machinery.
Diversification Opportunities for China Sports and Lutian Machinery
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Lutian is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding China Sports Industry and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and China Sports 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 China Sports Industry are associated (or correlated) with Lutian Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lutian Machinery has no effect on the direction of China Sports i.e., China Sports and Lutian Machinery go up and down completely randomly.
Pair Corralation between China Sports and Lutian Machinery
Assuming the 90 days trading horizon China Sports is expected to generate 3.62 times less return on investment than Lutian Machinery. In addition to that, China Sports is 1.25 times more volatile than Lutian Machinery Co. It trades about 0.07 of its total potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.3 per unit of volatility. If you would invest 1,480 in Lutian Machinery Co on November 7, 2024 and sell it today you would earn a total of 103.00 from holding Lutian Machinery Co or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Sports Industry vs. Lutian Machinery Co
Performance |
| Timeline |
| China Sports Industry |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lutian Machinery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China Sports and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Sports and Lutian Machinery
The main advantage of trading using opposite China Sports and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Sports position performs unexpectedly, Lutian Machinery 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 Lutian Machinery will offset losses from the drop in Lutian Machinery's long position.The idea behind China Sports Industry and Lutian Machinery 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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