Correlation Between Lutian Machinery and Nexchip Semiconductor
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By analyzing existing cross correlation between Lutian Machinery Co and Nexchip Semiconductor Corp, you can compare the effects of market volatilities on Lutian Machinery and Nexchip Semiconductor 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 Nexchip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Nexchip Semiconductor.
Diversification Opportunities for Lutian Machinery and Nexchip Semiconductor
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lutian and Nexchip is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Nexchip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexchip Semiconductor 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 Nexchip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexchip Semiconductor has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Nexchip Semiconductor go up and down completely randomly.
Pair Corralation between Lutian Machinery and Nexchip Semiconductor
Assuming the 90 days trading horizon Lutian Machinery is expected to generate 2.5 times less return on investment than Nexchip Semiconductor. But when comparing it to its historical volatility, Lutian Machinery Co is 1.88 times less risky than Nexchip Semiconductor. It trades about 0.13 of its potential returns per unit of risk. Nexchip Semiconductor Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,109 in Nexchip Semiconductor Corp on August 29, 2024 and sell it today you would earn a total of 396.00 from holding Nexchip Semiconductor Corp or generate 18.78% 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. Nexchip Semiconductor Corp
Performance |
| Timeline |
| Lutian Machinery |
| Nexchip Semiconductor |
Lutian Machinery and Nexchip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lutian Machinery and Nexchip Semiconductor
The main advantage of trading using opposite Lutian Machinery and Nexchip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Nexchip Semiconductor 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 Nexchip Semiconductor will offset losses from the drop in Nexchip Semiconductor's long position.| Lutian Machinery vs. Biwin Storage Technology | Lutian Machinery vs. PetroChina Co Ltd | Lutian Machinery vs. Industrial and Commercial | Lutian Machinery vs. China Construction Bank |
| Nexchip Semiconductor vs. Lutian Machinery Co | Nexchip Semiconductor vs. China Longyuan Power | Nexchip Semiconductor vs. Changshu Tongrun Auto | Nexchip Semiconductor vs. PetroChina Co Ltd |
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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