Correlation Between Shaanxi Construction and Lutian Machinery
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By analyzing existing cross correlation between Shaanxi Construction Machinery and Lutian Machinery Co, you can compare the effects of market volatilities on Shaanxi Construction and Lutian Machinery 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 Shaanxi Construction with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Construction and Lutian Machinery.
Diversification Opportunities for Shaanxi Construction and Lutian Machinery
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shaanxi and Lutian is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Construction Machinery and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Shaanxi Construction 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 Shaanxi Construction Machinery are associated (or correlated) with Lutian Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lutian Machinery has no effect on the direction of Shaanxi Construction i.e., Shaanxi Construction and Lutian Machinery go up and down completely randomly.
Pair Corralation between Shaanxi Construction and Lutian Machinery
Assuming the 90 days trading horizon Shaanxi Construction Machinery is expected to under-perform the Lutian Machinery. In addition to that, Shaanxi Construction is 1.58 times more volatile than Lutian Machinery Co. It trades about -0.02 of its total potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.0 per unit of volatility. If you would invest 1,722 in Lutian Machinery Co on September 4, 2024 and sell it today you would lose (136.00) from holding Lutian Machinery Co or give up 7.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shaanxi Construction Machinery vs. Lutian Machinery Co
Performance |
| Timeline |
| Shaanxi Construction |
| Lutian Machinery |
Shaanxi Construction and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaanxi Construction and Lutian Machinery
The main advantage of trading using opposite Shaanxi Construction and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaanxi Construction position performs unexpectedly, Lutian Machinery 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 Lutian Machinery will offset losses from the drop in Lutian Machinery's long position.| Shaanxi Construction vs. Chengdu Kanghua Biological | Shaanxi Construction vs. Beijing Wantai Biological | Shaanxi Construction vs. Suzhou Novoprotein Scientific | Shaanxi Construction vs. Aluminum Corp of |
| Lutian Machinery vs. Chengdu Kanghua Biological | Lutian Machinery vs. Beijing Wantai Biological | Lutian Machinery vs. Suzhou Novoprotein Scientific | Lutian Machinery vs. Aluminum Corp of |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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