Correlation Between Loongson Technology and Shanghai Shuixing
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By analyzing existing cross correlation between Loongson Technology Corp and Shanghai Shuixing Home, you can compare the effects of market volatilities on Loongson Technology and Shanghai Shuixing 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 Shanghai Shuixing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loongson Technology and Shanghai Shuixing.
Diversification Opportunities for Loongson Technology and Shanghai Shuixing
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loongson and Shanghai is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Loongson Technology Corp and Shanghai Shuixing Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Shuixing Home 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 Shanghai Shuixing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Shuixing Home has no effect on the direction of Loongson Technology i.e., Loongson Technology and Shanghai Shuixing go up and down completely randomly.
Pair Corralation between Loongson Technology and Shanghai Shuixing
Assuming the 90 days trading horizon Loongson Technology Corp is expected to generate 1.83 times more return on investment than Shanghai Shuixing. However, Loongson Technology is 1.83 times more volatile than Shanghai Shuixing Home. It trades about 0.05 of its potential returns per unit of risk. Shanghai Shuixing Home is currently generating about 0.03 per unit of risk. If you would invest 8,628 in Loongson Technology Corp on September 28, 2024 and sell it today you would earn a total of 6,162 from holding Loongson Technology Corp or generate 71.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loongson Technology Corp vs. Shanghai Shuixing Home
Performance |
| Timeline |
| Loongson Technology Corp |
| Shanghai Shuixing Home |
Loongson Technology and Shanghai Shuixing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loongson Technology and Shanghai Shuixing
The main advantage of trading using opposite Loongson Technology and Shanghai Shuixing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loongson Technology position performs unexpectedly, Shanghai Shuixing 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 Shanghai Shuixing will offset losses from the drop in Shanghai Shuixing's long position.| Loongson Technology vs. Ming Yang Smart | Loongson Technology vs. 159681 | Loongson Technology vs. 159005 | Loongson Technology vs. Loctek Ergonomic Technology |
| Shanghai Shuixing vs. Cambricon Technologies Corp | Shanghai Shuixing vs. Loongson Technology Corp | Shanghai Shuixing vs. Shenzhen Fortune Trend | Shanghai Shuixing 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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