Correlation Between Chengdu B and Ligao Foods
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By analyzing existing cross correlation between Chengdu B ray Media and Ligao Foods CoLtd, you can compare the effects of market volatilities on Chengdu B 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 Chengdu B with a short position of Ligao Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu B and Ligao Foods.
Diversification Opportunities for Chengdu B and Ligao Foods
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chengdu and Ligao is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu B ray Media 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 Chengdu B 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 Chengdu B ray Media 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 Chengdu B i.e., Chengdu B and Ligao Foods go up and down completely randomly.
Pair Corralation between Chengdu B and Ligao Foods
Assuming the 90 days trading horizon Chengdu B ray Media is expected to generate 1.05 times more return on investment than Ligao Foods. However, Chengdu B is 1.05 times more volatile than Ligao Foods CoLtd. It trades about 0.17 of its potential returns per unit of risk. Ligao Foods CoLtd is currently generating about 0.14 per unit of risk. If you would invest 447.00 in Chengdu B ray Media on November 9, 2024 and sell it today you would earn a total of 34.00 from holding Chengdu B ray Media or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu B ray Media vs. Ligao Foods CoLtd
Performance |
| Timeline |
| Chengdu B ray |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Ligao Foods CoLtd |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Chengdu B and Ligao Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu B and Ligao Foods
The main advantage of trading using opposite Chengdu B and Ligao Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu B 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.The idea behind Chengdu B ray Media and Ligao Foods CoLtd 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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