Correlation Between Chongqing Machinery and LION ONE
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and LION ONE 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 Chongqing Machinery and LION ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chongqing Machinery Electric and LION ONE METALS, you can compare the effects of market volatilities on Chongqing Machinery and LION ONE 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 Chongqing Machinery with a short position of LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and LION ONE.
Diversification Opportunities for Chongqing Machinery and LION ONE
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chongqing and LION is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS and Chongqing Machinery 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 Chongqing Machinery Electric are associated (or correlated) with LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and LION ONE go up and down completely randomly.
Pair Corralation between Chongqing Machinery and LION ONE
Assuming the 90 days horizon Chongqing Machinery is expected to generate 1.6 times less return on investment than LION ONE. In addition to that, Chongqing Machinery is 2.15 times more volatile than LION ONE METALS. It trades about 0.08 of its total potential returns per unit of risk. LION ONE METALS is currently generating about 0.28 per unit of volatility. If you would invest 17.00 in LION ONE METALS on October 21, 2024 and sell it today you would earn a total of 3.00 from holding LION ONE METALS or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. LION ONE METALS
Performance |
| Timeline |
| Chongqing Machinery |
| LION ONE METALS |
Chongqing Machinery and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and LION ONE
The main advantage of trading using opposite Chongqing Machinery and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| Chongqing Machinery vs. Vienna Insurance Group | Chongqing Machinery vs. Air Transport Services | Chongqing Machinery vs. Yuexiu Transport Infrastructure | Chongqing Machinery vs. Liberty Broadband |
| LION ONE vs. PTT Global Chemical | LION ONE vs. Federal Agricultural Mortgage | LION ONE vs. TIANDE CHEMICAL | LION ONE vs. Chongqing Machinery Electric |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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