Correlation Between Loongson Technology and Changsha Jingjia
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By analyzing existing cross correlation between Loongson Technology Corp and Changsha Jingjia Microelectronics, you can compare the effects of market volatilities on Loongson Technology and Changsha Jingjia 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 Changsha Jingjia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loongson Technology and Changsha Jingjia.
Diversification Opportunities for Loongson Technology and Changsha Jingjia
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Loongson and Changsha is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Loongson Technology Corp and Changsha Jingjia Microelectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changsha Jingjia Mic 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 Changsha Jingjia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changsha Jingjia Mic has no effect on the direction of Loongson Technology i.e., Loongson Technology and Changsha Jingjia go up and down completely randomly.
Pair Corralation between Loongson Technology and Changsha Jingjia
Assuming the 90 days trading horizon Loongson Technology is expected to generate 1.41 times less return on investment than Changsha Jingjia. But when comparing it to its historical volatility, Loongson Technology Corp is 1.08 times less risky than Changsha Jingjia. It trades about 0.03 of its potential returns per unit of risk. Changsha Jingjia Microelectronics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,045 in Changsha Jingjia Microelectronics on October 15, 2024 and sell it today you would earn a total of 2,885 from holding Changsha Jingjia Microelectronics or generate 47.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loongson Technology Corp vs. Changsha Jingjia Microelectron
Performance |
| Timeline |
| Loongson Technology Corp |
| Changsha Jingjia Mic |
Loongson Technology and Changsha Jingjia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loongson Technology and Changsha Jingjia
The main advantage of trading using opposite Loongson Technology and Changsha Jingjia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loongson Technology position performs unexpectedly, Changsha Jingjia 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 Changsha Jingjia will offset losses from the drop in Changsha Jingjia's long position.The idea behind Loongson Technology Corp and Changsha Jingjia Microelectronics 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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