Correlation Between Cass Information and Longfor Group
Can any of the company-specific risk be diversified away by investing in both Cass Information and Longfor Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cass Information and Longfor Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cass Information Systems and Longfor Group Holdings, you can compare the effects of market volatilities on Cass Information and Longfor Group 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 Cass Information with a short position of Longfor Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Longfor Group.
Diversification Opportunities for Cass Information and Longfor Group
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cass and Longfor is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Longfor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Group Holdings and Cass Information 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 Cass Information Systems are associated (or correlated) with Longfor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Group Holdings has no effect on the direction of Cass Information i.e., Cass Information and Longfor Group go up and down completely randomly.
Pair Corralation between Cass Information and Longfor Group
Assuming the 90 days horizon Cass Information is expected to generate 4.11 times less return on investment than Longfor Group. But when comparing it to its historical volatility, Cass Information Systems is 3.28 times less risky than Longfor Group. It trades about 0.04 of its potential returns per unit of risk. Longfor Group Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 87.00 in Longfor Group Holdings on September 1, 2024 and sell it today you would earn a total of 43.00 from holding Longfor Group Holdings or generate 49.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Information Systems vs. Longfor Group Holdings
Performance |
| Timeline |
| Cass Information Systems |
| Longfor Group Holdings |
Cass Information and Longfor Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and Longfor Group
The main advantage of trading using opposite Cass Information and Longfor Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, Longfor Group 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 Longfor Group will offset losses from the drop in Longfor Group's long position.| Cass Information vs. MTI WIRELESS EDGE | Cass Information vs. PKSHA TECHNOLOGY INC | Cass Information vs. MACOM Technology Solutions | Cass Information vs. NURAN WIRELESS INC |
| Longfor Group vs. Goodyear Tire Rubber | Longfor Group vs. THRACE PLASTICS | Longfor Group vs. Japan Post Insurance | Longfor Group vs. Direct Line Insurance |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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