Correlation Between China State and Lutian Machinery
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By analyzing existing cross correlation between China State Construction and Lutian Machinery Co, you can compare the effects of market volatilities on China State 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 State with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Lutian Machinery.
Diversification Opportunities for China State and Lutian Machinery
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Lutian is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction 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 State 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 State Construction 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 State i.e., China State and Lutian Machinery go up and down completely randomly.
Pair Corralation between China State and Lutian Machinery
Assuming the 90 days trading horizon China State Construction is expected to under-perform the Lutian Machinery. In addition to that, China State is 1.13 times more volatile than Lutian Machinery Co. It trades about -0.18 of its total potential returns per unit of risk. Lutian Machinery Co is currently generating about -0.02 per unit of volatility. If you would invest 1,583 in Lutian Machinery Co on November 28, 2024 and sell it today you would lose (7.00) from holding Lutian Machinery Co or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China State Construction vs. Lutian Machinery Co
Performance |
| Timeline |
| China State Construction |
| Lutian Machinery |
China State and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and Lutian Machinery
The main advantage of trading using opposite China State and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State 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 State vs. Guangzhou Dongfang Hotel | China State vs. Henan Shuanghui Investment | China State vs. Ningbo Ligong Online | China State vs. Beijing Mainstreets Investment |
| Lutian Machinery vs. Zoje Resources Investment | Lutian Machinery vs. Gan Yuan Foods | Lutian Machinery vs. Jiamei Food Packaging | Lutian Machinery vs. Jiugui Liquor Co |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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