Correlation Between Zoy Home and Lutian Machinery
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By analyzing existing cross correlation between Zoy Home Furnishing and Lutian Machinery Co, you can compare the effects of market volatilities on Zoy 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 Zoy Home with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoy Home and Lutian Machinery.
Diversification Opportunities for Zoy Home and Lutian Machinery
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Zoy and Lutian is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Zoy Home Furnishing and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Zoy 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 Zoy Home Furnishing 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 Zoy Home i.e., Zoy Home and Lutian Machinery go up and down completely randomly.
Pair Corralation between Zoy Home and Lutian Machinery
Assuming the 90 days trading horizon Zoy Home Furnishing is expected to generate 1.26 times more return on investment than Lutian Machinery. However, Zoy Home is 1.26 times more volatile than Lutian Machinery Co. It trades about 0.21 of its potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.09 per unit of risk. If you would invest 1,079 in Zoy Home Furnishing on September 13, 2024 and sell it today you would earn a total of 112.00 from holding Zoy Home Furnishing or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoy Home Furnishing vs. Lutian Machinery Co
Performance |
| Timeline |
| Zoy Home Furnishing |
| Lutian Machinery |
Zoy Home and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoy Home and Lutian Machinery
The main advantage of trading using opposite Zoy Home and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoy 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.| Zoy Home vs. Lutian Machinery Co | Zoy Home vs. China Longyuan Power | Zoy Home vs. PetroChina Co Ltd | Zoy Home vs. Bank of China |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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