Correlation Between Oppein Home and Long Yuan

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Can any of the company-specific risk be diversified away by investing in both Oppein Home and Long Yuan 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 Oppein Home and Long Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oppein Home Group and Long Yuan Construction, you can compare the effects of market volatilities on Oppein Home and Long Yuan 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 Oppein Home with a short position of Long Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppein Home and Long Yuan.

Diversification Opportunities for Oppein Home and Long Yuan

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Oppein and Long is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Oppein Home Group and Long Yuan Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Yuan Construction and Oppein 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 Oppein Home Group are associated (or correlated) with Long Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Yuan Construction has no effect on the direction of Oppein Home i.e., Oppein Home and Long Yuan go up and down completely randomly.

Pair Corralation between Oppein Home and Long Yuan

Assuming the 90 days trading horizon Oppein Home Group is expected to generate 1.07 times more return on investment than Long Yuan. However, Oppein Home is 1.07 times more volatile than Long Yuan Construction. It trades about 0.1 of its potential returns per unit of risk. Long Yuan Construction is currently generating about 0.1 per unit of risk. If you would invest  4,705  in Oppein Home Group on October 7, 2024 and sell it today you would earn a total of  2,025  from holding Oppein Home Group or generate 43.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Oppein Home Group  vs.  Long Yuan Construction

 Performance 
       Timeline  
Oppein Home Group 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Oppein Home Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Oppein Home sustained solid returns over the last few months and may actually be approaching a breakup point.
Long Yuan Construction 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Long Yuan Construction are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Long Yuan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oppein Home and Long Yuan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oppein Home and Long Yuan

The main advantage of trading using opposite Oppein Home and Long Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oppein Home position performs unexpectedly, Long Yuan 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 Long Yuan will offset losses from the drop in Long Yuan's long position.
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The idea behind Oppein Home Group and Long Yuan Construction 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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