Correlation Between Linzhou Heavy and Jiaozuo Wanfang
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By analyzing existing cross correlation between Linzhou Heavy Machinery and Jiaozuo Wanfang Aluminum, you can compare the effects of market volatilities on Linzhou Heavy and Jiaozuo Wanfang 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 Linzhou Heavy with a short position of Jiaozuo Wanfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linzhou Heavy and Jiaozuo Wanfang.
Diversification Opportunities for Linzhou Heavy and Jiaozuo Wanfang
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Linzhou and Jiaozuo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Linzhou Heavy Machinery and Jiaozuo Wanfang Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiaozuo Wanfang Aluminum and Linzhou Heavy 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 Linzhou Heavy Machinery are associated (or correlated) with Jiaozuo Wanfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiaozuo Wanfang Aluminum has no effect on the direction of Linzhou Heavy i.e., Linzhou Heavy and Jiaozuo Wanfang go up and down completely randomly.
Pair Corralation between Linzhou Heavy and Jiaozuo Wanfang
Assuming the 90 days trading horizon Linzhou Heavy Machinery is expected to generate 0.86 times more return on investment than Jiaozuo Wanfang. However, Linzhou Heavy Machinery is 1.17 times less risky than Jiaozuo Wanfang. It trades about 0.25 of its potential returns per unit of risk. Jiaozuo Wanfang Aluminum is currently generating about 0.16 per unit of risk. If you would invest 313.00 in Linzhou Heavy Machinery on September 8, 2024 and sell it today you would earn a total of 164.00 from holding Linzhou Heavy Machinery or generate 52.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Linzhou Heavy Machinery vs. Jiaozuo Wanfang Aluminum
Performance |
Timeline |
Linzhou Heavy Machinery |
Jiaozuo Wanfang Aluminum |
Linzhou Heavy and Jiaozuo Wanfang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Linzhou Heavy and Jiaozuo Wanfang
The main advantage of trading using opposite Linzhou Heavy and Jiaozuo Wanfang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linzhou Heavy position performs unexpectedly, Jiaozuo Wanfang 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 Jiaozuo Wanfang will offset losses from the drop in Jiaozuo Wanfang's long position.Linzhou Heavy vs. Ye Chiu Metal | Linzhou Heavy vs. Beijing HuaYuanYiTong Thermal | Linzhou Heavy vs. Tibet Huayu Mining | Linzhou Heavy vs. Uroica Mining Safety |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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