Correlation Between Lutian Machinery and Tianshan Aluminum
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By analyzing existing cross correlation between Lutian Machinery Co and Tianshan Aluminum Group, you can compare the effects of market volatilities on Lutian Machinery and Tianshan Aluminum 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 Tianshan Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Tianshan Aluminum.
Diversification Opportunities for Lutian Machinery and Tianshan Aluminum
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lutian and Tianshan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Tianshan Aluminum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianshan Aluminum 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 Tianshan Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianshan Aluminum has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Tianshan Aluminum go up and down completely randomly.
Pair Corralation between Lutian Machinery and Tianshan Aluminum
Assuming the 90 days trading horizon Lutian Machinery Co is expected to generate 1.08 times more return on investment than Tianshan Aluminum. However, Lutian Machinery is 1.08 times more volatile than Tianshan Aluminum Group. It trades about 0.18 of its potential returns per unit of risk. Tianshan Aluminum Group is currently generating about -0.02 per unit of risk. If you would invest 1,383 in Lutian Machinery Co on August 30, 2024 and sell it today you would earn a total of 151.00 from holding Lutian Machinery Co or generate 10.92% 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. Tianshan Aluminum Group
Performance |
| Timeline |
| Lutian Machinery |
| Tianshan Aluminum |
Lutian Machinery and Tianshan Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Tianshan Aluminum
The main advantage of trading using opposite Lutian Machinery and Tianshan Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Tianshan Aluminum 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 Tianshan Aluminum will offset losses from the drop in Tianshan Aluminum's long position.| Lutian Machinery vs. China Petroleum Chemical | Lutian Machinery vs. PetroChina Co Ltd | Lutian Machinery vs. China State Construction | Lutian Machinery vs. China Railway Group |
| Tianshan Aluminum vs. Lutian Machinery Co | Tianshan Aluminum vs. Changshu Tongrun Auto | Tianshan Aluminum vs. PetroChina Co Ltd | Tianshan Aluminum vs. Bank of China |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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