Correlation Between Loongson Technology and Nancal Energy
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By analyzing existing cross correlation between Loongson Technology Corp and Nancal Energy Saving Tech, you can compare the effects of market volatilities on Loongson Technology and Nancal Energy 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 Nancal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loongson Technology and Nancal Energy.
Diversification Opportunities for Loongson Technology and Nancal Energy
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Loongson and Nancal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Loongson Technology Corp and Nancal Energy Saving Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nancal Energy Saving 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 Nancal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nancal Energy Saving has no effect on the direction of Loongson Technology i.e., Loongson Technology and Nancal Energy go up and down completely randomly.
Pair Corralation between Loongson Technology and Nancal Energy
Assuming the 90 days trading horizon Loongson Technology is expected to generate 2.13 times less return on investment than Nancal Energy. But when comparing it to its historical volatility, Loongson Technology Corp is 1.56 times less risky than Nancal Energy. It trades about 0.21 of its potential returns per unit of risk. Nancal Energy Saving Tech is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,058 in Nancal Energy Saving Tech on September 1, 2024 and sell it today you would earn a total of 911.00 from holding Nancal Energy Saving Tech or generate 44.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Loongson Technology Corp vs. Nancal Energy Saving Tech
Performance |
| Timeline |
| Loongson Technology Corp |
| Nancal Energy Saving |
Loongson Technology and Nancal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loongson Technology and Nancal Energy
The main advantage of trading using opposite Loongson Technology and Nancal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loongson Technology position performs unexpectedly, Nancal Energy 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 Nancal Energy will offset losses from the drop in Nancal Energy's long position.The idea behind Loongson Technology Corp and Nancal Energy Saving Tech 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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