Correlation Between Loongson Technology and Eastern Communications
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By analyzing existing cross correlation between Loongson Technology Corp and Eastern Communications Co, you can compare the effects of market volatilities on Loongson Technology and Eastern Communications 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 Eastern Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loongson Technology and Eastern Communications.
Diversification Opportunities for Loongson Technology and Eastern Communications
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Loongson and Eastern is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Loongson Technology Corp and Eastern Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Communications 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 Eastern Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Communications has no effect on the direction of Loongson Technology i.e., Loongson Technology and Eastern Communications go up and down completely randomly.
Pair Corralation between Loongson Technology and Eastern Communications
Assuming the 90 days trading horizon Loongson Technology Corp is expected to generate 1.57 times more return on investment than Eastern Communications. However, Loongson Technology is 1.57 times more volatile than Eastern Communications Co. It trades about 0.06 of its potential returns per unit of risk. Eastern Communications Co is currently generating about 0.02 per unit of risk. If you would invest 9,175 in Loongson Technology Corp on September 12, 2024 and sell it today you would earn a total of 6,041 from holding Loongson Technology Corp or generate 65.84% 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. Eastern Communications Co
Performance |
| Timeline |
| Loongson Technology Corp |
| Eastern Communications |
Loongson Technology and Eastern Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loongson Technology and Eastern Communications
The main advantage of trading using opposite Loongson Technology and Eastern Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loongson Technology position performs unexpectedly, Eastern Communications 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 Eastern Communications will offset losses from the drop in Eastern Communications' long position.| Loongson Technology vs. Eastern Communications Co | Loongson Technology vs. Huaxia Fund Management | Loongson Technology vs. Allwin Telecommunication Co | Loongson Technology vs. AVIC Fund Management |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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