Correlation Between Lontium Semiconductor and Nanjing Putian
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By analyzing existing cross correlation between Lontium Semiconductor Corp and Nanjing Putian Telecommunications, you can compare the effects of market volatilities on Lontium Semiconductor and Nanjing Putian 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 Lontium Semiconductor with a short position of Nanjing Putian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lontium Semiconductor and Nanjing Putian.
Diversification Opportunities for Lontium Semiconductor and Nanjing Putian
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lontium and Nanjing is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lontium Semiconductor Corp and Nanjing Putian Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Putian Telec and Lontium 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 Lontium Semiconductor Corp are associated (or correlated) with Nanjing Putian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Putian Telec has no effect on the direction of Lontium Semiconductor i.e., Lontium Semiconductor and Nanjing Putian go up and down completely randomly.
Pair Corralation between Lontium Semiconductor and Nanjing Putian
Assuming the 90 days trading horizon Lontium Semiconductor is expected to generate 2.74 times less return on investment than Nanjing Putian. In addition to that, Lontium Semiconductor is 1.04 times more volatile than Nanjing Putian Telecommunications. It trades about 0.09 of its total potential returns per unit of risk. Nanjing Putian Telecommunications is currently generating about 0.25 per unit of volatility. If you would invest 106.00 in Nanjing Putian Telecommunications on October 18, 2024 and sell it today you would earn a total of 266.00 from holding Nanjing Putian Telecommunications or generate 250.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lontium Semiconductor Corp vs. Nanjing Putian Telecommunicati
Performance |
Timeline |
Lontium Semiconductor |
Nanjing Putian Telec |
Lontium Semiconductor and Nanjing Putian Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lontium Semiconductor and Nanjing Putian
The main advantage of trading using opposite Lontium Semiconductor and Nanjing Putian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lontium Semiconductor position performs unexpectedly, Nanjing Putian 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 Nanjing Putian will offset losses from the drop in Nanjing Putian's long position.The idea behind Lontium Semiconductor Corp and Nanjing Putian Telecommunications 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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