Correlation Between Longjian Road and Guangdong Tianhe
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By analyzing existing cross correlation between Longjian Road Bridge and Guangdong Tianhe Agricultural, you can compare the effects of market volatilities on Longjian Road and Guangdong Tianhe 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 Guangdong Tianhe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longjian Road and Guangdong Tianhe.
Diversification Opportunities for Longjian Road and Guangdong Tianhe
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Longjian and Guangdong is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Longjian Road Bridge and Guangdong Tianhe Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Tianhe Agr 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 Guangdong Tianhe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Tianhe Agr has no effect on the direction of Longjian Road i.e., Longjian Road and Guangdong Tianhe go up and down completely randomly.
Pair Corralation between Longjian Road and Guangdong Tianhe
Assuming the 90 days trading horizon Longjian Road Bridge is expected to under-perform the Guangdong Tianhe. But the stock apears to be less risky and, when comparing its historical volatility, Longjian Road Bridge is 1.07 times less risky than Guangdong Tianhe. The stock trades about -0.01 of its potential returns per unit of risk. The Guangdong Tianhe Agricultural is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 563.00 in Guangdong Tianhe Agricultural on November 7, 2024 and sell it today you would earn a total of 39.00 from holding Guangdong Tianhe Agricultural or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longjian Road Bridge vs. Guangdong Tianhe Agricultural
Performance |
| Timeline |
| Longjian Road Bridge |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Guangdong Tianhe Agr |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Longjian Road and Guangdong Tianhe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longjian Road and Guangdong Tianhe
The main advantage of trading using opposite Longjian Road and Guangdong Tianhe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longjian Road position performs unexpectedly, Guangdong Tianhe 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 Guangdong Tianhe will offset losses from the drop in Guangdong Tianhe's long position.The idea behind Longjian Road Bridge and Guangdong Tianhe Agricultural 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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