Correlation Between Lutian Machinery and Guangdong Liantai
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By analyzing existing cross correlation between Lutian Machinery Co and Guangdong Liantai Environmental, you can compare the effects of market volatilities on Lutian Machinery and Guangdong Liantai 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 Liantai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Guangdong Liantai.
Diversification Opportunities for Lutian Machinery and Guangdong Liantai
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lutian and Guangdong is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Guangdong Liantai Environmenta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Liantai 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 Liantai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Liantai has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Guangdong Liantai go up and down completely randomly.
Pair Corralation between Lutian Machinery and Guangdong Liantai
Assuming the 90 days trading horizon Lutian Machinery is expected to generate 6.49 times less return on investment than Guangdong Liantai. But when comparing it to its historical volatility, Lutian Machinery Co is 1.05 times less risky than Guangdong Liantai. It trades about 0.04 of its potential returns per unit of risk. Guangdong Liantai Environmental is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 418.00 in Guangdong Liantai Environmental on September 14, 2024 and sell it today you would earn a total of 39.00 from holding Guangdong Liantai Environmental or generate 9.33% 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. Guangdong Liantai Environmenta
Performance |
| Timeline |
| Lutian Machinery |
| Guangdong Liantai |
Lutian Machinery and Guangdong Liantai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Guangdong Liantai
The main advantage of trading using opposite Lutian Machinery and Guangdong Liantai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Guangdong Liantai 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 Liantai will offset losses from the drop in Guangdong Liantai'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 |
| Guangdong Liantai vs. Lutian Machinery Co | Guangdong Liantai vs. China Longyuan Power | Guangdong Liantai vs. PetroChina Co Ltd | Guangdong Liantai vs. Bank of China |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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