Correlation Between Travelers Companies and Longfor Group
Can any of the company-specific risk be diversified away by investing in both Travelers Companies 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 Travelers Companies and Longfor Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Travelers Companies and Longfor Group Holdings, you can compare the effects of market volatilities on Travelers Companies 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 Travelers Companies with a short position of Longfor Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Longfor Group.
Diversification Opportunities for Travelers Companies and Longfor Group
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Travelers and Longfor is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies 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 Travelers Companies 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 The Travelers Companies 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 Travelers Companies i.e., Travelers Companies and Longfor Group go up and down completely randomly.
Pair Corralation between Travelers Companies and Longfor Group
Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.22 times more return on investment than Longfor Group. However, The Travelers Companies is 4.54 times less risky than Longfor Group. It trades about 0.06 of its potential returns per unit of risk. Longfor Group Holdings is currently generating about 0.01 per unit of risk. If you would invest 18,034 in The Travelers Companies on September 3, 2024 and sell it today you would earn a total of 8,570 from holding The Travelers Companies or generate 47.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Longfor Group Holdings
Performance |
| Timeline |
| The Travelers Companies |
| Longfor Group Holdings |
Travelers Companies and Longfor Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Longfor Group
The main advantage of trading using opposite Travelers Companies and Longfor Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies 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.| Travelers Companies vs. SPACE | Travelers Companies vs. Ampleforth | Travelers Companies vs. ionet | Travelers Companies vs. KIN |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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