Correlation Between Loongson Technology and Guangdong TianYiMa
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By analyzing existing cross correlation between Loongson Technology Corp and Guangdong TianYiMa Information, you can compare the effects of market volatilities on Loongson Technology and Guangdong TianYiMa 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 Guangdong TianYiMa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loongson Technology and Guangdong TianYiMa.
Diversification Opportunities for Loongson Technology and Guangdong TianYiMa
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Loongson and Guangdong is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Loongson Technology Corp and Guangdong TianYiMa Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong TianYiMa 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 Guangdong TianYiMa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong TianYiMa has no effect on the direction of Loongson Technology i.e., Loongson Technology and Guangdong TianYiMa go up and down completely randomly.
Pair Corralation between Loongson Technology and Guangdong TianYiMa
Assuming the 90 days trading horizon Loongson Technology Corp is expected to under-perform the Guangdong TianYiMa. But the stock apears to be less risky and, when comparing its historical volatility, Loongson Technology Corp is 1.17 times less risky than Guangdong TianYiMa. The stock trades about -0.11 of its potential returns per unit of risk. The Guangdong TianYiMa Information is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,459 in Guangdong TianYiMa Information on November 7, 2024 and sell it today you would earn a total of 276.00 from holding Guangdong TianYiMa Information or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loongson Technology Corp vs. Guangdong TianYiMa Information
Performance |
| Timeline |
| Loongson Technology Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Guangdong TianYiMa |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Loongson Technology and Guangdong TianYiMa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loongson Technology and Guangdong TianYiMa
The main advantage of trading using opposite Loongson Technology and Guangdong TianYiMa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loongson Technology position performs unexpectedly, Guangdong TianYiMa 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 Guangdong TianYiMa will offset losses from the drop in Guangdong TianYiMa's long position.The idea behind Loongson Technology Corp and Guangdong TianYiMa Information 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.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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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