Correlation Between Longjian Road and Changshu Ruite
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By analyzing existing cross correlation between Longjian Road Bridge and Changshu Ruite Electric, you can compare the effects of market volatilities on Longjian Road and Changshu Ruite 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 Changshu Ruite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longjian Road and Changshu Ruite.
Diversification Opportunities for Longjian Road and Changshu Ruite
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Longjian and Changshu is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Longjian Road Bridge and Changshu Ruite Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changshu Ruite Electric 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 Changshu Ruite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changshu Ruite Electric has no effect on the direction of Longjian Road i.e., Longjian Road and Changshu Ruite go up and down completely randomly.
Pair Corralation between Longjian Road and Changshu Ruite
Assuming the 90 days trading horizon Longjian Road is expected to generate 1.35 times less return on investment than Changshu Ruite. But when comparing it to its historical volatility, Longjian Road Bridge is 1.34 times less risky than Changshu Ruite. It trades about 0.08 of its potential returns per unit of risk. Changshu Ruite Electric is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 698.00 in Changshu Ruite Electric on September 3, 2024 and sell it today you would earn a total of 26.00 from holding Changshu Ruite Electric or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longjian Road Bridge vs. Changshu Ruite Electric
Performance |
| Timeline |
| Longjian Road Bridge |
| Changshu Ruite Electric |
Longjian Road and Changshu Ruite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longjian Road and Changshu Ruite
The main advantage of trading using opposite Longjian Road and Changshu Ruite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longjian Road position performs unexpectedly, Changshu Ruite 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 Changshu Ruite will offset losses from the drop in Changshu Ruite'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 |
| Changshu Ruite vs. Keda Clean Energy | Changshu Ruite vs. Juneyao Airlines | Changshu Ruite vs. Longjian Road Bridge | Changshu Ruite vs. Fujian Longzhou Transportation |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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