Correlation Between Allied Machinery and Lutian Machinery
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By analyzing existing cross correlation between Allied Machinery Co and Lutian Machinery Co, you can compare the effects of market volatilities on Allied Machinery 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 Allied Machinery with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Machinery and Lutian Machinery.
Diversification Opportunities for Allied Machinery and Lutian Machinery
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Allied and Lutian is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Allied Machinery Co and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Allied Machinery 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 Allied Machinery Co 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 Allied Machinery i.e., Allied Machinery and Lutian Machinery go up and down completely randomly.
Pair Corralation between Allied Machinery and Lutian Machinery
Assuming the 90 days trading horizon Allied Machinery is expected to generate 1.63 times less return on investment than Lutian Machinery. In addition to that, Allied Machinery is 1.24 times more volatile than Lutian Machinery Co. It trades about 0.02 of its total potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.05 per unit of volatility. If you would invest 1,360 in Lutian Machinery Co on September 27, 2024 and sell it today you would earn a total of 145.00 from holding Lutian Machinery Co or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Machinery Co vs. Lutian Machinery Co
Performance |
| Timeline |
| Allied Machinery |
| Lutian Machinery |
Allied Machinery and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Machinery and Lutian Machinery
The main advantage of trading using opposite Allied Machinery and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Machinery 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.| Allied Machinery vs. HeBei Jinniu Chemical | Allied Machinery vs. Markor International Home | Allied Machinery vs. Guizhou Chanhen Chemical | Allied Machinery vs. Xilong Chemical Co |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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