Correlation Between Guangdong Liantai and Eastern Air
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By analyzing existing cross correlation between Guangdong Liantai Environmental and Eastern Air Logistics, you can compare the effects of market volatilities on Guangdong Liantai and Eastern Air 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 Guangdong Liantai with a short position of Eastern Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Liantai and Eastern Air.
Diversification Opportunities for Guangdong Liantai and Eastern Air
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and Eastern is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Liantai Environmenta and Eastern Air Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Air Logistics and Guangdong Liantai 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 Guangdong Liantai Environmental are associated (or correlated) with Eastern Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Air Logistics has no effect on the direction of Guangdong Liantai i.e., Guangdong Liantai and Eastern Air go up and down completely randomly.
Pair Corralation between Guangdong Liantai and Eastern Air
Assuming the 90 days trading horizon Guangdong Liantai Environmental is expected to generate 1.31 times more return on investment than Eastern Air. However, Guangdong Liantai is 1.31 times more volatile than Eastern Air Logistics. It trades about 0.19 of its potential returns per unit of risk. Eastern Air Logistics is currently generating about -0.24 per unit of risk. If you would invest 393.00 in Guangdong Liantai Environmental on September 1, 2024 and sell it today you would earn a total of 37.00 from holding Guangdong Liantai Environmental or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Liantai Environmenta vs. Eastern Air Logistics
Performance |
| Timeline |
| Guangdong Liantai |
| Eastern Air Logistics |
Guangdong Liantai and Eastern Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Liantai and Eastern Air
The main advantage of trading using opposite Guangdong Liantai and Eastern Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Liantai position performs unexpectedly, Eastern Air 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 Eastern Air will offset losses from the drop in Eastern Air's long position.The idea behind Guangdong Liantai Environmental and Eastern Air Logistics 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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