Correlation Between Guangzhou Automobile and Lutian Machinery
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By analyzing existing cross correlation between Guangzhou Automobile Group and Lutian Machinery Co, you can compare the effects of market volatilities on Guangzhou Automobile 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 Guangzhou Automobile with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Automobile and Lutian Machinery.
Diversification Opportunities for Guangzhou Automobile and Lutian Machinery
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Guangzhou and Lutian is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Automobile Group and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Guangzhou Automobile 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 Guangzhou Automobile Group 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 Guangzhou Automobile i.e., Guangzhou Automobile and Lutian Machinery go up and down completely randomly.
Pair Corralation between Guangzhou Automobile and Lutian Machinery
Assuming the 90 days trading horizon Guangzhou Automobile is expected to generate 6.22 times less return on investment than Lutian Machinery. But when comparing it to its historical volatility, Guangzhou Automobile Group is 1.08 times less risky than Lutian Machinery. It trades about 0.02 of its potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,410 in Lutian Machinery Co on August 29, 2024 and sell it today you would earn a total of 105.00 from holding Lutian Machinery Co or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Automobile Group vs. Lutian Machinery Co
Performance |
| Timeline |
| Guangzhou Automobile |
| Lutian Machinery |
Guangzhou Automobile and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Automobile and Lutian Machinery
The main advantage of trading using opposite Guangzhou Automobile and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Automobile 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.| Guangzhou Automobile vs. Agricultural Bank of | Guangzhou Automobile vs. Industrial and Commercial | Guangzhou Automobile vs. Bank of China | Guangzhou Automobile vs. China Construction Bank |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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