Correlation Between Trade Van and Lihtai Construction
Can any of the company-specific risk be diversified away by investing in both Trade Van and Lihtai Construction at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Trade Van and Lihtai Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trade Van Information Services and Lihtai Construction Enterprise, you can compare the effects of market volatilities on Trade Van and Lihtai Construction 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 Trade Van with a short position of Lihtai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Van and Lihtai Construction.
Diversification Opportunities for Trade Van and Lihtai Construction
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Trade and Lihtai is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Trade Van Information Services and Lihtai Construction Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lihtai Construction and Trade Van 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 Trade Van Information Services are associated (or correlated) with Lihtai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lihtai Construction has no effect on the direction of Trade Van i.e., Trade Van and Lihtai Construction go up and down completely randomly.
Pair Corralation between Trade Van and Lihtai Construction
Assuming the 90 days trading horizon Trade Van is expected to generate 1.21 times less return on investment than Lihtai Construction. But when comparing it to its historical volatility, Trade Van Information Services is 1.82 times less risky than Lihtai Construction. It trades about 0.1 of its potential returns per unit of risk. Lihtai Construction Enterprise is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,322 in Lihtai Construction Enterprise on October 25, 2024 and sell it today you would earn a total of 2,908 from holding Lihtai Construction Enterprise or generate 54.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trade Van Information Services vs. Lihtai Construction Enterprise
Performance |
| Timeline |
| Trade Van Information |
| Lihtai Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Trade Van and Lihtai Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trade Van and Lihtai Construction
The main advantage of trading using opposite Trade Van and Lihtai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Van position performs unexpectedly, Lihtai Construction 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 Lihtai Construction will offset losses from the drop in Lihtai Construction's long position.| Trade Van vs. Taiwan Sakura Corp | Trade Van vs. Charoen Pokphand Enterprise | Trade Van vs. Taiwan Cogeneration Corp | Trade Van vs. Taiwan Secom Co |
| Lihtai Construction vs. Chinese Maritime Transport | Lihtai Construction vs. Univacco Technology | Lihtai Construction vs. Voltronic Power Technology | Lihtai Construction vs. Evergreen Steel Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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