Correlation Between Lutian Machinery and Changchun Faway
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By analyzing existing cross correlation between Lutian Machinery Co and Changchun Faway Automobile, you can compare the effects of market volatilities on Lutian Machinery and Changchun Faway 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 Changchun Faway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Changchun Faway.
Diversification Opportunities for Lutian Machinery and Changchun Faway
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lutian and Changchun is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Changchun Faway Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun Faway Auto 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 Changchun Faway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun Faway Auto has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Changchun Faway go up and down completely randomly.
Pair Corralation between Lutian Machinery and Changchun Faway
Assuming the 90 days trading horizon Lutian Machinery Co is expected to generate 0.79 times more return on investment than Changchun Faway. However, Lutian Machinery Co is 1.26 times less risky than Changchun Faway. It trades about 0.09 of its potential returns per unit of risk. Changchun Faway Automobile is currently generating about 0.03 per unit of risk. If you would invest 1,540 in Lutian Machinery Co on September 13, 2024 and sell it today you would earn a total of 50.00 from holding Lutian Machinery Co or generate 3.25% 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. Changchun Faway Automobile
Performance |
| Timeline |
| Lutian Machinery |
| Changchun Faway Auto |
Lutian Machinery and Changchun Faway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Changchun Faway
The main advantage of trading using opposite Lutian Machinery and Changchun Faway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Changchun Faway 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 Changchun Faway will offset losses from the drop in Changchun Faway's long position.| Lutian Machinery vs. Industrial and Commercial | Lutian Machinery vs. Kweichow Moutai Co | Lutian Machinery vs. Agricultural Bank of | Lutian Machinery vs. China Mobile Limited |
| Changchun Faway vs. BeiGene | Changchun Faway vs. Kweichow Moutai Co | Changchun Faway vs. Beijing Roborock Technology | Changchun Faway vs. G bits Network Technology |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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