Correlation Between Daoming OpticsChemical and Lianhe Chemical
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By analyzing existing cross correlation between Daoming OpticsChemical Co and Lianhe Chemical Technology, you can compare the effects of market volatilities on Daoming OpticsChemical and Lianhe Chemical 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 Daoming OpticsChemical with a short position of Lianhe Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daoming OpticsChemical and Lianhe Chemical.
Diversification Opportunities for Daoming OpticsChemical and Lianhe Chemical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daoming and Lianhe is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Daoming OpticsChemical Co and Lianhe Chemical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lianhe Chemical Tech and Daoming OpticsChemical 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 Daoming OpticsChemical Co are associated (or correlated) with Lianhe Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lianhe Chemical Tech has no effect on the direction of Daoming OpticsChemical i.e., Daoming OpticsChemical and Lianhe Chemical go up and down completely randomly.
Pair Corralation between Daoming OpticsChemical and Lianhe Chemical
Assuming the 90 days trading horizon Daoming OpticsChemical Co is expected to generate 1.13 times more return on investment than Lianhe Chemical. However, Daoming OpticsChemical is 1.13 times more volatile than Lianhe Chemical Technology. It trades about 0.21 of its potential returns per unit of risk. Lianhe Chemical Technology is currently generating about 0.14 per unit of risk. If you would invest 677.00 in Daoming OpticsChemical Co on September 23, 2024 and sell it today you would earn a total of 323.00 from holding Daoming OpticsChemical Co or generate 47.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Daoming OpticsChemical Co vs. Lianhe Chemical Technology
Performance |
Timeline |
Daoming OpticsChemical |
Lianhe Chemical Tech |
Daoming OpticsChemical and Lianhe Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Daoming OpticsChemical and Lianhe Chemical
The main advantage of trading using opposite Daoming OpticsChemical and Lianhe Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daoming OpticsChemical position performs unexpectedly, Lianhe Chemical 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 Lianhe Chemical will offset losses from the drop in Lianhe Chemical's long position.Daoming OpticsChemical vs. Zijin Mining Group | Daoming OpticsChemical vs. Wanhua Chemical Group | Daoming OpticsChemical vs. Baoshan Iron Steel | Daoming OpticsChemical vs. Shandong Gold Mining |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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