Correlation Between Lutian Machinery and Changshu Tongrun
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By analyzing existing cross correlation between Lutian Machinery Co and Changshu Tongrun Auto, you can compare the effects of market volatilities on Lutian Machinery and Changshu Tongrun 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 Changshu Tongrun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Changshu Tongrun.
Diversification Opportunities for Lutian Machinery and Changshu Tongrun
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lutian and Changshu is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Changshu Tongrun Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changshu Tongrun 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 Changshu Tongrun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changshu Tongrun Auto has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Changshu Tongrun go up and down completely randomly.
Pair Corralation between Lutian Machinery and Changshu Tongrun
Assuming the 90 days trading horizon Lutian Machinery is expected to generate 1.49 times less return on investment than Changshu Tongrun. But when comparing it to its historical volatility, Lutian Machinery Co is 1.5 times less risky than Changshu Tongrun. It trades about 0.14 of its potential returns per unit of risk. Changshu Tongrun Auto is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,324 in Changshu Tongrun Auto on August 29, 2024 and sell it today you would earn a total of 409.00 from holding Changshu Tongrun Auto or generate 30.89% 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. Changshu Tongrun Auto
Performance |
| Timeline |
| Lutian Machinery |
| Changshu Tongrun Auto |
Lutian Machinery and Changshu Tongrun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Changshu Tongrun
The main advantage of trading using opposite Lutian Machinery and Changshu Tongrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Changshu Tongrun 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 Changshu Tongrun will offset losses from the drop in Changshu Tongrun's long position.| Lutian Machinery vs. Winner Medical Co | Lutian Machinery vs. Shengda Mining Co | Lutian Machinery vs. Guangdong Silvere Sci | Lutian Machinery vs. Guocheng Mining Co |
| Changshu Tongrun vs. Changshu Tianyin Electromechan | Changshu Tongrun vs. Changshu Ruite Electric | Changshu Tongrun vs. Changshu Automotive Trim | Changshu Tongrun vs. Zhejiang Zanyu 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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