Correlation Between Lutian Machinery and Fujian Newland
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By analyzing existing cross correlation between Lutian Machinery Co and Fujian Newland Computer, you can compare the effects of market volatilities on Lutian Machinery and Fujian Newland 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 Fujian Newland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Fujian Newland.
Diversification Opportunities for Lutian Machinery and Fujian Newland
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lutian and Fujian is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Fujian Newland Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Newland Computer 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 Fujian Newland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Newland Computer has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Fujian Newland go up and down completely randomly.
Pair Corralation between Lutian Machinery and Fujian Newland
Assuming the 90 days trading horizon Lutian Machinery is expected to generate 2.08 times less return on investment than Fujian Newland. But when comparing it to its historical volatility, Lutian Machinery Co is 1.46 times less risky than Fujian Newland. It trades about 0.18 of its potential returns per unit of risk. Fujian Newland Computer is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,649 in Fujian Newland Computer on August 25, 2024 and sell it today you would earn a total of 356.00 from holding Fujian Newland Computer or generate 21.59% 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. Fujian Newland Computer
Performance |
| Timeline |
| Lutian Machinery |
| Fujian Newland Computer |
Lutian Machinery and Fujian Newland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Fujian Newland
The main advantage of trading using opposite Lutian Machinery and Fujian Newland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Fujian Newland 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 Fujian Newland will offset losses from the drop in Fujian Newland's long position.| Lutian Machinery vs. Chengdu Kanghua Biological | Lutian Machinery vs. Beijing Wantai Biological | Lutian Machinery vs. Suzhou Novoprotein Scientific | Lutian Machinery vs. Aluminum Corp of |
| Fujian Newland vs. Ming Yang Smart | Fujian Newland vs. 159005 | Fujian Newland vs. Loctek Ergonomic Technology | Fujian Newland vs. Xiamen East Asia |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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