Correlation Between Fangda Special and Ligao Foods
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By analyzing existing cross correlation between Fangda Special Steel and Ligao Foods CoLtd, you can compare the effects of market volatilities on Fangda Special and Ligao Foods 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 Fangda Special with a short position of Ligao Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fangda Special and Ligao Foods.
Diversification Opportunities for Fangda Special and Ligao Foods
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fangda and Ligao is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fangda Special Steel and Ligao Foods CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligao Foods CoLtd and Fangda Special 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 Fangda Special Steel are associated (or correlated) with Ligao Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligao Foods CoLtd has no effect on the direction of Fangda Special i.e., Fangda Special and Ligao Foods go up and down completely randomly.
Pair Corralation between Fangda Special and Ligao Foods
Assuming the 90 days trading horizon Fangda Special Steel is expected to generate 0.52 times more return on investment than Ligao Foods. However, Fangda Special Steel is 1.94 times less risky than Ligao Foods. It trades about -0.02 of its potential returns per unit of risk. Ligao Foods CoLtd is currently generating about -0.04 per unit of risk. If you would invest 561.00 in Fangda Special Steel on December 12, 2024 and sell it today you would lose (120.00) from holding Fangda Special Steel or give up 21.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Fangda Special Steel vs. Ligao Foods CoLtd
Performance |
| Timeline |
| Fangda Special Steel |
| Ligao Foods CoLtd |
Fangda Special and Ligao Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fangda Special and Ligao Foods
The main advantage of trading using opposite Fangda Special and Ligao Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fangda Special position performs unexpectedly, Ligao Foods 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 Ligao Foods will offset losses from the drop in Ligao Foods' long position.| Fangda Special vs. Chinese Universe Publishing | ||
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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