Correlation Between AUPU Home and Lutian Machinery

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Can any of the company-specific risk be diversified away by investing in both AUPU Home and Lutian Machinery at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AUPU Home and Lutian Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUPU Home Style and Lutian Machinery Co, you can compare the effects of market volatilities on AUPU Home 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 AUPU Home with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUPU Home and Lutian Machinery.

Diversification Opportunities for AUPU Home and Lutian Machinery

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between AUPU and Lutian is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding AUPU Home Style and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and AUPU Home 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 AUPU Home Style 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 AUPU Home i.e., AUPU Home and Lutian Machinery go up and down completely randomly.

Pair Corralation between AUPU Home and Lutian Machinery

Assuming the 90 days trading horizon AUPU Home Style is expected to generate 1.11 times more return on investment than Lutian Machinery. However, AUPU Home is 1.11 times more volatile than Lutian Machinery Co. It trades about 0.02 of its potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.0 per unit of risk. If you would invest  1,114  in AUPU Home Style on September 12, 2024 and sell it today you would earn a total of  57.00  from holding AUPU Home Style or generate 5.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

AUPU Home Style  vs.  Lutian Machinery Co

 Performance 
       Timeline  
AUPU Home Style 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in AUPU Home Style are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AUPU Home sustained solid returns over the last few months and may actually be approaching a breakup point.
Lutian Machinery 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Lutian Machinery Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lutian Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

AUPU Home and Lutian Machinery Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AUPU Home and Lutian Machinery

The main advantage of trading using opposite AUPU Home and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUPU Home 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.
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The idea behind AUPU Home Style and Lutian Machinery Co 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.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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