Correlation Between Lutian Machinery and Chongqing Changan
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By analyzing existing cross correlation between Lutian Machinery Co and Chongqing Changan Automobile, you can compare the effects of market volatilities on Lutian Machinery and Chongqing Changan 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 Chongqing Changan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Chongqing Changan.
Diversification Opportunities for Lutian Machinery and Chongqing Changan
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lutian and Chongqing is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Chongqing Changan Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Changan 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 Chongqing Changan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Changan has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Chongqing Changan go up and down completely randomly.
Pair Corralation between Lutian Machinery and Chongqing Changan
Assuming the 90 days trading horizon Lutian Machinery Co is expected to generate 0.82 times more return on investment than Chongqing Changan. However, Lutian Machinery Co is 1.23 times less risky than Chongqing Changan. It trades about 0.16 of its potential returns per unit of risk. Chongqing Changan Automobile is currently generating about 0.1 per unit of risk. If you would invest 1,252 in Lutian Machinery Co on August 31, 2024 and sell it today you would earn a total of 286.00 from holding Lutian Machinery Co or generate 22.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lutian Machinery Co vs. Chongqing Changan Automobile
Performance |
| Timeline |
| Lutian Machinery |
| Chongqing Changan |
Lutian Machinery and Chongqing Changan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Chongqing Changan
The main advantage of trading using opposite Lutian Machinery and Chongqing Changan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Chongqing Changan 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 Chongqing Changan will offset losses from the drop in Chongqing Changan's long position.| Lutian Machinery vs. Cultural Investment Holdings | Lutian Machinery vs. Gome Telecom Equipment | Lutian Machinery vs. Bus Online Co | Lutian Machinery vs. Holitech Technology Co |
| Chongqing Changan vs. China State Construction | Chongqing Changan vs. China Merchants Shekou | Chongqing Changan vs. Huafa Industrial Co | Chongqing Changan vs. China International Capital |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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