Correlation Between Lutian Machinery and Zhejiang Xiantong
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By analyzing existing cross correlation between Lutian Machinery Co and Zhejiang Xiantong RubberPlastic, you can compare the effects of market volatilities on Lutian Machinery and Zhejiang Xiantong 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 Zhejiang Xiantong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Zhejiang Xiantong.
Diversification Opportunities for Lutian Machinery and Zhejiang Xiantong
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lutian and Zhejiang is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Zhejiang Xiantong RubberPlasti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Xiantong 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 Zhejiang Xiantong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Xiantong has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Zhejiang Xiantong go up and down completely randomly.
Pair Corralation between Lutian Machinery and Zhejiang Xiantong
Assuming the 90 days trading horizon Lutian Machinery Co is expected to under-perform the Zhejiang Xiantong. But the stock apears to be less risky and, when comparing its historical volatility, Lutian Machinery Co is 1.28 times less risky than Zhejiang Xiantong. The stock trades about 0.0 of its potential returns per unit of risk. The Zhejiang Xiantong RubberPlastic is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,388 in Zhejiang Xiantong RubberPlastic on September 12, 2024 and sell it today you would earn a total of 47.00 from holding Zhejiang Xiantong RubberPlastic or generate 3.39% 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. Zhejiang Xiantong RubberPlasti
Performance |
| Timeline |
| Lutian Machinery |
| Zhejiang Xiantong |
Lutian Machinery and Zhejiang Xiantong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Zhejiang Xiantong
The main advantage of trading using opposite Lutian Machinery and Zhejiang Xiantong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Zhejiang Xiantong 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 Zhejiang Xiantong will offset losses from the drop in Zhejiang Xiantong's long position.| Lutian Machinery vs. Agricultural Bank of | Lutian Machinery vs. Industrial and Commercial | Lutian Machinery vs. Bank of China | Lutian Machinery vs. PetroChina Co Ltd |
| Zhejiang Xiantong vs. Lutian Machinery Co | Zhejiang Xiantong vs. PetroChina Co Ltd | Zhejiang Xiantong vs. Bank of China | Zhejiang Xiantong 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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