Correlation Between Loongson Technology and Dongfeng Automobile
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By analyzing existing cross correlation between Loongson Technology Corp and Dongfeng Automobile Co, you can compare the effects of market volatilities on Loongson Technology and Dongfeng Automobile 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 Dongfeng Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loongson Technology and Dongfeng Automobile.
Diversification Opportunities for Loongson Technology and Dongfeng Automobile
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Loongson and Dongfeng is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Loongson Technology Corp and Dongfeng Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongfeng Automobile 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 Dongfeng Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongfeng Automobile has no effect on the direction of Loongson Technology i.e., Loongson Technology and Dongfeng Automobile go up and down completely randomly.
Pair Corralation between Loongson Technology and Dongfeng Automobile
Assuming the 90 days trading horizon Loongson Technology Corp is expected to generate 1.38 times more return on investment than Dongfeng Automobile. However, Loongson Technology is 1.38 times more volatile than Dongfeng Automobile Co. It trades about 0.05 of its potential returns per unit of risk. Dongfeng Automobile Co is currently generating about 0.04 per unit of risk. If you would invest 8,624 in Loongson Technology Corp on September 14, 2024 and sell it today you would earn a total of 6,626 from holding Loongson Technology Corp or generate 76.83% 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. Dongfeng Automobile Co
Performance |
| Timeline |
| Loongson Technology Corp |
| Dongfeng Automobile |
Loongson Technology and Dongfeng Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loongson Technology and Dongfeng Automobile
The main advantage of trading using opposite Loongson Technology and Dongfeng Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loongson Technology position performs unexpectedly, Dongfeng Automobile 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 Dongfeng Automobile will offset losses from the drop in Dongfeng Automobile's long position.| Loongson Technology vs. Silkroad Visual Technology | Loongson Technology vs. Heilongjiang Transport Development | Loongson Technology vs. Harbin Air Conditioning | Loongson Technology vs. Shaanxi Broadcast TV |
| Dongfeng Automobile vs. Cambricon Technologies Corp | Dongfeng Automobile vs. Loongson Technology Corp | Dongfeng Automobile vs. Shenzhen Fortune Trend | Dongfeng Automobile vs. Chongqing Road Bridge |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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