Correlation Between Lutian Machinery and New Hope
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By analyzing existing cross correlation between Lutian Machinery Co and New Hope Dairy, you can compare the effects of market volatilities on Lutian Machinery and New Hope 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 New Hope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and New Hope.
Diversification Opportunities for Lutian Machinery and New Hope
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lutian and New is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and New Hope Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hope Dairy 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 New Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hope Dairy has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and New Hope go up and down completely randomly.
Pair Corralation between Lutian Machinery and New Hope
Assuming the 90 days trading horizon Lutian Machinery is expected to generate 2.2 times less return on investment than New Hope. But when comparing it to its historical volatility, Lutian Machinery Co is 1.34 times less risky than New Hope. It trades about 0.05 of its potential returns per unit of risk. New Hope Dairy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,014 in New Hope Dairy on September 2, 2024 and sell it today you would earn a total of 287.00 from holding New Hope Dairy or generate 28.3% 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. New Hope Dairy
Performance |
| Timeline |
| Lutian Machinery |
| New Hope Dairy |
Lutian Machinery and New Hope Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and New Hope
The main advantage of trading using opposite Lutian Machinery and New Hope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, New Hope 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 New Hope will offset losses from the drop in New Hope's long position.| Lutian Machinery vs. Hangzhou Gaoxin Rubber | Lutian Machinery vs. Chengtun Mining Group | Lutian Machinery vs. Eastern Air Logistics | Lutian Machinery vs. Suzhou Xingye Material |
| New Hope vs. Chongqing Changan Automobile | New Hope vs. Ningbo Fangzheng Automobile | New Hope vs. Jiangsu Xinri E Vehicle | New Hope vs. Ningxia Younglight Chemicals |
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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