Correlation Between China Railway and Lutian Machinery
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By analyzing existing cross correlation between China Railway Group and Lutian Machinery Co, you can compare the effects of market volatilities on China Railway 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 China Railway with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Lutian Machinery.
Diversification Opportunities for China Railway and Lutian Machinery
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Lutian is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding China Railway 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 China Railway 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 China Railway 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 China Railway i.e., China Railway and Lutian Machinery go up and down completely randomly.
Pair Corralation between China Railway and Lutian Machinery
Assuming the 90 days trading horizon China Railway Group is expected to generate 1.12 times more return on investment than Lutian Machinery. However, China Railway is 1.12 times more volatile than Lutian Machinery Co. It trades about 0.0 of its potential returns per unit of risk. Lutian Machinery Co is currently generating about -0.01 per unit of risk. If you would invest 645.00 in China Railway Group on November 28, 2024 and sell it today you would lose (59.00) from holding China Railway Group or give up 9.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Group vs. Lutian Machinery Co
Performance |
| Timeline |
| China Railway Group |
| Lutian Machinery |
China Railway and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Lutian Machinery
The main advantage of trading using opposite China Railway and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway 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.| China Railway vs. Hengerda New Materials | China Railway vs. Songz Automobile Air | China Railway vs. Ningbo Tip Rubber | China Railway vs. TianJin 712 Communication |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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