Correlation Between LION ONE and Yangzijiang Shipbuilding
Can any of the company-specific risk be diversified away by investing in both LION ONE and Yangzijiang Shipbuilding 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 LION ONE and Yangzijiang Shipbuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LION ONE METALS and Yangzijiang Shipbuilding, you can compare the effects of market volatilities on LION ONE and Yangzijiang Shipbuilding 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 LION ONE with a short position of Yangzijiang Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Yangzijiang Shipbuilding.
Diversification Opportunities for LION ONE and Yangzijiang Shipbuilding
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LION and Yangzijiang is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Yangzijiang Shipbuilding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yangzijiang Shipbuilding and LION ONE 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 LION ONE METALS are associated (or correlated) with Yangzijiang Shipbuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yangzijiang Shipbuilding has no effect on the direction of LION ONE i.e., LION ONE and Yangzijiang Shipbuilding go up and down completely randomly.
Pair Corralation between LION ONE and Yangzijiang Shipbuilding
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Yangzijiang Shipbuilding. In addition to that, LION ONE is 1.2 times more volatile than Yangzijiang Shipbuilding. It trades about -0.15 of its total potential returns per unit of risk. Yangzijiang Shipbuilding is currently generating about 0.1 per unit of volatility. If you would invest 181.00 in Yangzijiang Shipbuilding on September 14, 2024 and sell it today you would earn a total of 12.00 from holding Yangzijiang Shipbuilding or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. Yangzijiang Shipbuilding
Performance |
| Timeline |
| LION ONE METALS |
| Yangzijiang Shipbuilding |
LION ONE and Yangzijiang Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Yangzijiang Shipbuilding
The main advantage of trading using opposite LION ONE and Yangzijiang Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, Yangzijiang Shipbuilding 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 Yangzijiang Shipbuilding will offset losses from the drop in Yangzijiang Shipbuilding's long position.The idea behind LION ONE METALS and Yangzijiang Shipbuilding 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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