Correlation Between Loongson Technology and Tianjin LVYIN
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By analyzing existing cross correlation between Loongson Technology Corp and Tianjin LVYIN Landscape, you can compare the effects of market volatilities on Loongson Technology and Tianjin LVYIN 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 Loongson Technology with a short position of Tianjin LVYIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loongson Technology and Tianjin LVYIN.
Diversification Opportunities for Loongson Technology and Tianjin LVYIN
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loongson and Tianjin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Loongson Technology Corp and Tianjin LVYIN Landscape in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin LVYIN Landscape and Loongson Technology 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 Loongson Technology Corp are associated (or correlated) with Tianjin LVYIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin LVYIN Landscape has no effect on the direction of Loongson Technology i.e., Loongson Technology and Tianjin LVYIN go up and down completely randomly.
Pair Corralation between Loongson Technology and Tianjin LVYIN
Assuming the 90 days trading horizon Loongson Technology Corp is expected to under-perform the Tianjin LVYIN. But the stock apears to be less risky and, when comparing its historical volatility, Loongson Technology Corp is 1.46 times less risky than Tianjin LVYIN. The stock trades about -0.41 of its potential returns per unit of risk. The Tianjin LVYIN Landscape is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest 803.00 in Tianjin LVYIN Landscape on October 14, 2024 and sell it today you would lose (161.00) from holding Tianjin LVYIN Landscape or give up 20.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loongson Technology Corp vs. Tianjin LVYIN Landscape
Performance |
| Timeline |
| Loongson Technology Corp |
| Tianjin LVYIN Landscape |
Loongson Technology and Tianjin LVYIN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loongson Technology and Tianjin LVYIN
The main advantage of trading using opposite Loongson Technology and Tianjin LVYIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loongson Technology position performs unexpectedly, Tianjin LVYIN 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 Tianjin LVYIN will offset losses from the drop in Tianjin LVYIN's long position.The idea behind Loongson Technology Corp and Tianjin LVYIN Landscape pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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