Correlation Between Lutian Machinery and Guangzhou Dongfang
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By analyzing existing cross correlation between Lutian Machinery Co and Guangzhou Dongfang Hotel, you can compare the effects of market volatilities on Lutian Machinery and Guangzhou Dongfang 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 Lutian Machinery with a short position of Guangzhou Dongfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Guangzhou Dongfang.
Diversification Opportunities for Lutian Machinery and Guangzhou Dongfang
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lutian and Guangzhou is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Guangzhou Dongfang Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Dongfang Hotel and Lutian 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 Lutian Machinery Co are associated (or correlated) with Guangzhou Dongfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Dongfang Hotel has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Guangzhou Dongfang go up and down completely randomly.
Pair Corralation between Lutian Machinery and Guangzhou Dongfang
Assuming the 90 days trading horizon Lutian Machinery Co is expected to under-perform the Guangzhou Dongfang. But the stock apears to be less risky and, when comparing its historical volatility, Lutian Machinery Co is 1.42 times less risky than Guangzhou Dongfang. The stock trades about -0.01 of its potential returns per unit of risk. The Guangzhou Dongfang Hotel is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,032 in Guangzhou Dongfang Hotel on September 12, 2024 and sell it today you would lose (2.00) from holding Guangzhou Dongfang Hotel or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lutian Machinery Co vs. Guangzhou Dongfang Hotel
Performance |
| Timeline |
| Lutian Machinery |
| Guangzhou Dongfang Hotel |
Lutian Machinery and Guangzhou Dongfang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Guangzhou Dongfang
The main advantage of trading using opposite Lutian Machinery and Guangzhou Dongfang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Guangzhou Dongfang 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 Guangzhou Dongfang will offset losses from the drop in Guangzhou Dongfang's long position.| Lutian Machinery vs. Agricultural Bank of | Lutian Machinery vs. Industrial and Commercial | Lutian Machinery vs. Bank of China | Lutian Machinery vs. PetroChina Co Ltd |
| Guangzhou Dongfang vs. Lutian Machinery Co | Guangzhou Dongfang vs. PetroChina Co Ltd | Guangzhou Dongfang vs. Bank of China | Guangzhou Dongfang vs. Gansu Jiu Steel |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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