Correlation Between Lutian Machinery and Guangdong Wens
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By analyzing existing cross correlation between Lutian Machinery Co and Guangdong Wens Foodstuff, you can compare the effects of market volatilities on Lutian Machinery and Guangdong Wens 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 Wens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Guangdong Wens.
Diversification Opportunities for Lutian Machinery and Guangdong Wens
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lutian and Guangdong is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Guangdong Wens Foodstuff in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Wens Foodstuff 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 Wens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Wens Foodstuff has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Guangdong Wens go up and down completely randomly.
Pair Corralation between Lutian Machinery and Guangdong Wens
Assuming the 90 days trading horizon Lutian Machinery Co is expected to generate 1.75 times more return on investment than Guangdong Wens. However, Lutian Machinery is 1.75 times more volatile than Guangdong Wens Foodstuff. It trades about 0.14 of its potential returns per unit of risk. Guangdong Wens Foodstuff is currently generating about -0.24 per unit of risk. If you would invest 1,431 in Lutian Machinery Co on August 31, 2024 and sell it today you would earn a total of 107.00 from holding Lutian Machinery Co or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lutian Machinery Co vs. Guangdong Wens Foodstuff
Performance |
| Timeline |
| Lutian Machinery |
| Guangdong Wens Foodstuff |
Lutian Machinery and Guangdong Wens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Guangdong Wens
The main advantage of trading using opposite Lutian Machinery and Guangdong Wens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Guangdong Wens 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 Wens will offset losses from the drop in Guangdong Wens' long position.| Lutian Machinery vs. Cultural Investment Holdings | Lutian Machinery vs. Gome Telecom Equipment | Lutian Machinery vs. Bus Online Co | Lutian Machinery vs. Holitech Technology Co |
| Guangdong Wens vs. Lutian Machinery Co | Guangdong Wens vs. PetroChina Co Ltd | Guangdong Wens vs. Bank of China | Guangdong Wens 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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