Correlation Between Loongson Technology and Lutian Machinery
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By analyzing existing cross correlation between Loongson Technology Corp and Lutian Machinery Co, you can compare the effects of market volatilities on Loongson Technology and Lutian Machinery 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 Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loongson Technology and Lutian Machinery.
Diversification Opportunities for Loongson Technology and Lutian Machinery
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Loongson and Lutian is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Loongson Technology Corp and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery 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 Lutian Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lutian Machinery has no effect on the direction of Loongson Technology i.e., Loongson Technology and Lutian Machinery go up and down completely randomly.
Pair Corralation between Loongson Technology and Lutian Machinery
Assuming the 90 days trading horizon Loongson Technology Corp is expected to generate 2.0 times more return on investment than Lutian Machinery. However, Loongson Technology is 2.0 times more volatile than Lutian Machinery Co. It trades about 0.08 of its potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.02 per unit of risk. If you would invest 10,405 in Loongson Technology Corp on August 25, 2024 and sell it today you would earn a total of 4,073 from holding Loongson Technology Corp or generate 39.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loongson Technology Corp vs. Lutian Machinery Co
Performance |
| Timeline |
| Loongson Technology Corp |
| Lutian Machinery |
Loongson Technology and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loongson Technology and Lutian Machinery
The main advantage of trading using opposite Loongson Technology and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loongson Technology position performs unexpectedly, Lutian Machinery 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 Lutian Machinery will offset losses from the drop in Lutian Machinery's long position.| Loongson Technology vs. Lutian Machinery Co | Loongson Technology vs. China Longyuan Power | Loongson Technology vs. Changshu Tongrun Auto | Loongson Technology vs. PetroChina Co Ltd |
| Lutian Machinery vs. Biwin Storage Technology | Lutian Machinery vs. PetroChina Co Ltd | Lutian Machinery vs. Industrial and Commercial | Lutian Machinery vs. China Construction Bank |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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