Correlation Between Lithium Boron and Puda Coal
Can any of the company-specific risk be diversified away by investing in both Lithium Boron and Puda Coal 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 Lithium Boron and Puda Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Boron Technology and Puda Coal New, you can compare the effects of market volatilities on Lithium Boron and Puda Coal 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 Lithium Boron with a short position of Puda Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Boron and Puda Coal.
Diversification Opportunities for Lithium Boron and Puda Coal
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lithium and Puda is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Boron Technology and Puda Coal New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puda Coal New and Lithium Boron 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 Lithium Boron Technology are associated (or correlated) with Puda Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puda Coal New has no effect on the direction of Lithium Boron i.e., Lithium Boron and Puda Coal go up and down completely randomly.
Pair Corralation between Lithium Boron and Puda Coal
If you would invest 2,462 in Lithium Boron Technology on November 9, 2024 and sell it today you would earn a total of 180.00 from holding Lithium Boron Technology or generate 7.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Lithium Boron Technology vs. Puda Coal New
Performance |
| Timeline |
| Lithium Boron Technology |
| Puda Coal New |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Lithium Boron and Puda Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Boron and Puda Coal
The main advantage of trading using opposite Lithium Boron and Puda Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Boron position performs unexpectedly, Puda Coal 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 Puda Coal will offset losses from the drop in Puda Coal's long position.The idea behind Lithium Boron Technology and Puda Coal New 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.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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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