Correlation Between Longjian Road and Hainan Haiqi
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By analyzing existing cross correlation between Longjian Road Bridge and Hainan Haiqi Transportation, you can compare the effects of market volatilities on Longjian Road and Hainan Haiqi 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 Hainan Haiqi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longjian Road and Hainan Haiqi.
Diversification Opportunities for Longjian Road and Hainan Haiqi
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Longjian and Hainan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Longjian Road Bridge and Hainan Haiqi Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Haiqi Transpo 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 Hainan Haiqi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Haiqi Transpo has no effect on the direction of Longjian Road i.e., Longjian Road and Hainan Haiqi go up and down completely randomly.
Pair Corralation between Longjian Road and Hainan Haiqi
Assuming the 90 days trading horizon Longjian Road Bridge is expected to under-perform the Hainan Haiqi. But the stock apears to be less risky and, when comparing its historical volatility, Longjian Road Bridge is 1.59 times less risky than Hainan Haiqi. The stock trades about -0.03 of its potential returns per unit of risk. The Hainan Haiqi Transportation is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,690 in Hainan Haiqi Transportation on November 8, 2024 and sell it today you would earn a total of 121.00 from holding Hainan Haiqi Transportation or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longjian Road Bridge vs. Hainan Haiqi Transportation
Performance |
| Timeline |
| Longjian Road Bridge |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hainan Haiqi Transpo |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Longjian Road and Hainan Haiqi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longjian Road and Hainan Haiqi
The main advantage of trading using opposite Longjian Road and Hainan Haiqi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longjian Road position performs unexpectedly, Hainan Haiqi 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 Hainan Haiqi will offset losses from the drop in Hainan Haiqi's long position.The idea behind Longjian Road Bridge and Hainan Haiqi Transportation 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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