Correlation Between LianDi Clean and BOSTON

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Can any of the company-specific risk be diversified away by investing in both LianDi Clean and BOSTON 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 LianDi Clean and BOSTON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LianDi Clean Technology and BOSTON PPTYS LTD, you can compare the effects of market volatilities on LianDi Clean and BOSTON 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 LianDi Clean with a short position of BOSTON. Check out your portfolio center. Please also check ongoing floating volatility patterns of LianDi Clean and BOSTON.

Diversification Opportunities for LianDi Clean and BOSTON

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between LianDi and BOSTON is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding LianDi Clean Technology and BOSTON PPTYS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON PPTYS LTD and LianDi Clean 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 LianDi Clean Technology are associated (or correlated) with BOSTON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON PPTYS LTD has no effect on the direction of LianDi Clean i.e., LianDi Clean and BOSTON go up and down completely randomly.

Pair Corralation between LianDi Clean and BOSTON

Given the investment horizon of 90 days LianDi Clean Technology is expected to under-perform the BOSTON. In addition to that, LianDi Clean is 13.11 times more volatile than BOSTON PPTYS LTD. It trades about -0.21 of its total potential returns per unit of risk. BOSTON PPTYS LTD is currently generating about -0.2 per unit of volatility. If you would invest  9,633  in BOSTON PPTYS LTD on November 3, 2024 and sell it today you would lose (332.00) from holding BOSTON PPTYS LTD or give up 3.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

LianDi Clean Technology  vs.  BOSTON PPTYS LTD

 Performance 
       Timeline  
LianDi Clean Technology 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days LianDi Clean Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
BOSTON PPTYS LTD 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BOSTON PPTYS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BOSTON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

LianDi Clean and BOSTON Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LianDi Clean and BOSTON

The main advantage of trading using opposite LianDi Clean and BOSTON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LianDi Clean position performs unexpectedly, BOSTON 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 BOSTON will offset losses from the drop in BOSTON's long position.
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The idea behind LianDi Clean Technology and BOSTON PPTYS LTD 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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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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