Correlation Between Lutian Machinery and Kuangda Technology
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By analyzing existing cross correlation between Lutian Machinery Co and Kuangda Technology Group, you can compare the effects of market volatilities on Lutian Machinery and Kuangda Technology 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 Kuangda Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Kuangda Technology.
Diversification Opportunities for Lutian Machinery and Kuangda Technology
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lutian and Kuangda is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Kuangda Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuangda Technology 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 Kuangda Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuangda Technology has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Kuangda Technology go up and down completely randomly.
Pair Corralation between Lutian Machinery and Kuangda Technology
Assuming the 90 days trading horizon Lutian Machinery is expected to generate 1.98 times less return on investment than Kuangda Technology. But when comparing it to its historical volatility, Lutian Machinery Co is 1.17 times less risky than Kuangda Technology. It trades about 0.02 of its potential returns per unit of risk. Kuangda Technology Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 486.00 in Kuangda Technology Group on September 12, 2024 and sell it today you would earn a total of 95.00 from holding Kuangda Technology Group or generate 19.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lutian Machinery Co vs. Kuangda Technology Group
Performance |
| Timeline |
| Lutian Machinery |
| Kuangda Technology |
Lutian Machinery and Kuangda Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Kuangda Technology
The main advantage of trading using opposite Lutian Machinery and Kuangda Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Kuangda Technology 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 Kuangda Technology will offset losses from the drop in Kuangda Technology'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 |
| Kuangda Technology vs. Lutian Machinery Co | Kuangda Technology vs. PetroChina Co Ltd | Kuangda Technology vs. Bank of China | Kuangda Technology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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