Correlation Between Lutian Machinery and Zhejiang Juhua
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By analyzing existing cross correlation between Lutian Machinery Co and Zhejiang Juhua Co, you can compare the effects of market volatilities on Lutian Machinery and Zhejiang Juhua 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 Lutian Machinery with a short position of Zhejiang Juhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lutian Machinery and Zhejiang Juhua.
Diversification Opportunities for Lutian Machinery and Zhejiang Juhua
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lutian and Zhejiang is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Lutian Machinery Co and Zhejiang Juhua Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Juhua and Lutian Machinery 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 Lutian Machinery Co are associated (or correlated) with Zhejiang Juhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Juhua has no effect on the direction of Lutian Machinery i.e., Lutian Machinery and Zhejiang Juhua go up and down completely randomly.
Pair Corralation between Lutian Machinery and Zhejiang Juhua
Assuming the 90 days trading horizon Lutian Machinery is expected to generate 1.39 times less return on investment than Zhejiang Juhua. But when comparing it to its historical volatility, Lutian Machinery Co is 1.19 times less risky than Zhejiang Juhua. It trades about 0.15 of its potential returns per unit of risk. Zhejiang Juhua Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,740 in Zhejiang Juhua Co on September 24, 2024 and sell it today you would earn a total of 551.00 from holding Zhejiang Juhua Co or generate 31.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Lutian Machinery Co vs. Zhejiang Juhua Co
Performance |
Timeline |
Lutian Machinery |
Zhejiang Juhua |
Lutian Machinery and Zhejiang Juhua Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lutian Machinery and Zhejiang Juhua
The main advantage of trading using opposite Lutian Machinery and Zhejiang Juhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lutian Machinery position performs unexpectedly, Zhejiang Juhua 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 Zhejiang Juhua will offset losses from the drop in Zhejiang Juhua's long position.Lutian Machinery vs. Bank of China | Lutian Machinery vs. Kweichow Moutai Co | Lutian Machinery vs. PetroChina Co Ltd | Lutian Machinery vs. Bank of Communications |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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