Correlation Between Longjian Road and Hunan Investment
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By analyzing existing cross correlation between Longjian Road Bridge and Hunan Investment Group, you can compare the effects of market volatilities on Longjian Road and Hunan Investment 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 Longjian Road with a short position of Hunan Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longjian Road and Hunan Investment.
Diversification Opportunities for Longjian Road and Hunan Investment
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Longjian and Hunan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Longjian Road Bridge and Hunan Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Investment and Longjian Road 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 Longjian Road Bridge are associated (or correlated) with Hunan Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Investment has no effect on the direction of Longjian Road i.e., Longjian Road and Hunan Investment go up and down completely randomly.
Pair Corralation between Longjian Road and Hunan Investment
Assuming the 90 days trading horizon Longjian Road is expected to generate 21.27 times less return on investment than Hunan Investment. But when comparing it to its historical volatility, Longjian Road Bridge is 1.22 times less risky than Hunan Investment. It trades about 0.0 of its potential returns per unit of risk. Hunan Investment Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 534.00 in Hunan Investment Group on September 3, 2024 and sell it today you would earn a total of 47.00 from holding Hunan Investment Group or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longjian Road Bridge vs. Hunan Investment Group
Performance |
| Timeline |
| Longjian Road Bridge |
| Hunan Investment |
Longjian Road and Hunan Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longjian Road and Hunan Investment
The main advantage of trading using opposite Longjian Road and Hunan Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longjian Road position performs unexpectedly, Hunan Investment 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 Hunan Investment will offset losses from the drop in Hunan Investment's long position.| Longjian Road vs. Cultural Investment Holdings | Longjian Road vs. Gome Telecom Equipment | Longjian Road vs. Bus Online Co | Longjian Road vs. Holitech Technology Co |
| Hunan Investment vs. Xinke Material | Hunan Investment vs. King Strong New Material | Hunan Investment vs. Advanced Technology Materials | Hunan Investment vs. Dhc Software 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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