Correlation Between Namchow Food and Lutian Machinery
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By analyzing existing cross correlation between Namchow Food Group and Lutian Machinery Co, you can compare the effects of market volatilities on Namchow Food and Lutian Machinery 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 Namchow Food with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namchow Food and Lutian Machinery.
Diversification Opportunities for Namchow Food and Lutian Machinery
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Namchow and Lutian is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Namchow Food Group and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Namchow Food 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 Namchow Food Group are associated (or correlated) with Lutian Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lutian Machinery has no effect on the direction of Namchow Food i.e., Namchow Food and Lutian Machinery go up and down completely randomly.
Pair Corralation between Namchow Food and Lutian Machinery
Assuming the 90 days trading horizon Namchow Food Group is expected to under-perform the Lutian Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Namchow Food Group is 1.23 times less risky than Lutian Machinery. The stock trades about -0.01 of its potential returns per unit of risk. The Lutian Machinery Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,472 in Lutian Machinery Co on August 31, 2024 and sell it today you would earn a total of 66.00 from holding Lutian Machinery Co or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namchow Food Group vs. Lutian Machinery Co
Performance |
| Timeline |
| Namchow Food Group |
| Lutian Machinery |
Namchow Food and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namchow Food and Lutian Machinery
The main advantage of trading using opposite Namchow Food and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namchow Food position performs unexpectedly, Lutian Machinery 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 Lutian Machinery will offset losses from the drop in Lutian Machinery's long position.| Namchow Food vs. Lutian Machinery Co | Namchow Food vs. PetroChina Co Ltd | Namchow Food vs. Bank of China | Namchow Food vs. Gansu Jiu Steel |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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