Correlation Between Southchip Semiconductor and Lutian Machinery
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By analyzing existing cross correlation between Southchip Semiconductor Technology and Lutian Machinery Co, you can compare the effects of market volatilities on Southchip Semiconductor 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 Southchip Semiconductor with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southchip Semiconductor and Lutian Machinery.
Diversification Opportunities for Southchip Semiconductor and Lutian Machinery
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southchip and Lutian is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Southchip Semiconductor Techno and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Southchip Semiconductor 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 Southchip Semiconductor Technology 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 Southchip Semiconductor i.e., Southchip Semiconductor and Lutian Machinery go up and down completely randomly.
Pair Corralation between Southchip Semiconductor and Lutian Machinery
Assuming the 90 days trading horizon Southchip Semiconductor Technology is expected to generate 1.27 times more return on investment than Lutian Machinery. However, Southchip Semiconductor is 1.27 times more volatile than Lutian Machinery Co. It trades about -0.03 of its potential returns per unit of risk. Lutian Machinery Co is currently generating about -0.05 per unit of risk. If you would invest 3,534 in Southchip Semiconductor Technology on January 27, 2025 and sell it today you would lose (136.00) from holding Southchip Semiconductor Technology or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southchip Semiconductor Techno vs. Lutian Machinery Co
Performance |
| Timeline |
| Southchip Semiconductor |
| Lutian Machinery |
Southchip Semiconductor and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southchip Semiconductor and Lutian Machinery
The main advantage of trading using opposite Southchip Semiconductor and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southchip Semiconductor 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.The idea behind Southchip Semiconductor Technology and Lutian Machinery Co 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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