Correlation Between Lutian Machinery and Guangdong Qunxing
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By analyzing existing cross correlation between Lutian Machinery Co and Guangdong Qunxing Toys, you can compare the effects of market volatilities on Lutian Machinery and Guangdong Qunxing 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 Guangdong Qunxing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Guangdong Qunxing.
Diversification Opportunities for Lutian Machinery and Guangdong Qunxing
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lutian and Guangdong is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Guangdong Qunxing Toys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Qunxing Toys 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 Guangdong Qunxing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Qunxing Toys has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Guangdong Qunxing go up and down completely randomly.
Pair Corralation between Lutian Machinery and Guangdong Qunxing
Assuming the 90 days trading horizon Lutian Machinery is expected to generate 3.92 times less return on investment than Guangdong Qunxing. But when comparing it to its historical volatility, Lutian Machinery Co is 1.51 times less risky than Guangdong Qunxing. It trades about 0.02 of its potential returns per unit of risk. Guangdong Qunxing Toys is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 569.00 in Guangdong Qunxing Toys on September 12, 2024 and sell it today you would earn a total of 274.00 from holding Guangdong Qunxing Toys or generate 48.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Lutian Machinery Co vs. Guangdong Qunxing Toys
Performance |
| Timeline |
| Lutian Machinery |
| Guangdong Qunxing Toys |
Lutian Machinery and Guangdong Qunxing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Guangdong Qunxing
The main advantage of trading using opposite Lutian Machinery and Guangdong Qunxing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Guangdong Qunxing 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 Guangdong Qunxing will offset losses from the drop in Guangdong Qunxing'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 |
| Guangdong Qunxing vs. Lutian Machinery Co | Guangdong Qunxing vs. PetroChina Co Ltd | Guangdong Qunxing vs. Bank of China | Guangdong Qunxing 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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