Correlation Between Lutian Machinery and Guizhou Chanhen
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By analyzing existing cross correlation between Lutian Machinery Co and Guizhou Chanhen Chemical, you can compare the effects of market volatilities on Lutian Machinery and Guizhou Chanhen 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 Guizhou Chanhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Guizhou Chanhen.
Diversification Opportunities for Lutian Machinery and Guizhou Chanhen
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lutian and Guizhou is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Guizhou Chanhen Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guizhou Chanhen Chemical 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 Guizhou Chanhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guizhou Chanhen Chemical has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Guizhou Chanhen go up and down completely randomly.
Pair Corralation between Lutian Machinery and Guizhou Chanhen
Assuming the 90 days trading horizon Lutian Machinery Co is expected to under-perform the Guizhou Chanhen. But the stock apears to be less risky and, when comparing its historical volatility, Lutian Machinery Co is 1.26 times less risky than Guizhou Chanhen. The stock trades about -0.01 of its potential returns per unit of risk. The Guizhou Chanhen Chemical is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,702 in Guizhou Chanhen Chemical on October 27, 2024 and sell it today you would lose (507.00) from holding Guizhou Chanhen Chemical or give up 18.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lutian Machinery Co vs. Guizhou Chanhen Chemical
Performance |
| Timeline |
| Lutian Machinery |
| Guizhou Chanhen Chemical |
Lutian Machinery and Guizhou Chanhen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Guizhou Chanhen
The main advantage of trading using opposite Lutian Machinery and Guizhou Chanhen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Guizhou Chanhen 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 Guizhou Chanhen will offset losses from the drop in Guizhou Chanhen's long position.| Lutian Machinery vs. PetroChina Co Ltd | Lutian Machinery vs. Industrial and Commercial | Lutian Machinery vs. China Petroleum Chemical | Lutian Machinery vs. China Construction Bank |
| Guizhou Chanhen vs. Central Plains Environment | Guizhou Chanhen vs. GreenTech Environmental Co | Guizhou Chanhen vs. Fujian Nanwang Environment | Guizhou Chanhen vs. Eit Environmental Development |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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