Correlation Between Lutian Machinery and Guangzhou Restaurants
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By analyzing existing cross correlation between Lutian Machinery Co and Guangzhou Restaurants Group, you can compare the effects of market volatilities on Lutian Machinery and Guangzhou Restaurants 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 Guangzhou Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Guangzhou Restaurants.
Diversification Opportunities for Lutian Machinery and Guangzhou Restaurants
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lutian and Guangzhou is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Guangzhou Restaurants Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Restaurants 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 Guangzhou Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Restaurants has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Guangzhou Restaurants go up and down completely randomly.
Pair Corralation between Lutian Machinery and Guangzhou Restaurants
Assuming the 90 days trading horizon Lutian Machinery Co is expected to generate 1.08 times more return on investment than Guangzhou Restaurants. However, Lutian Machinery is 1.08 times more volatile than Guangzhou Restaurants Group. It trades about -0.01 of its potential returns per unit of risk. Guangzhou Restaurants Group is currently generating about -0.06 per unit of risk. If you would invest 1,849 in Lutian Machinery Co on November 7, 2024 and sell it today you would lose (266.00) from holding Lutian Machinery Co or give up 14.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lutian Machinery Co vs. Guangzhou Restaurants Group
Performance |
| Timeline |
| Lutian Machinery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Guangzhou Restaurants |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lutian Machinery and Guangzhou Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Guangzhou Restaurants
The main advantage of trading using opposite Lutian Machinery and Guangzhou Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Guangzhou Restaurants 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 Guangzhou Restaurants will offset losses from the drop in Guangzhou Restaurants' long position.The idea behind Lutian Machinery Co and Guangzhou Restaurants Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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