Correlation Between Mechanics Construction and Long An

Can any of the company-specific risk be diversified away by investing in both Mechanics Construction and Long An 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 Mechanics Construction and Long An into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mechanics Construction and and Long An Food, you can compare the effects of market volatilities on Mechanics Construction and Long An 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 Mechanics Construction with a short position of Long An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mechanics Construction and Long An.

Diversification Opportunities for Mechanics Construction and Long An

-0.31

Correlation Coefficient

Mechanics Construction  Long An

Very good diversification

The 3 months correlation between Mechanics and Long is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mechanics Construction and and Long An Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long An Food and Mechanics Construction 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 Mechanics Construction and are associated (or correlated) with Long An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long An Food has no effect on the direction of Mechanics Construction i.e., Mechanics Construction and Long An go up and down completely randomly.

Pair Corralation between Mechanics Construction and Long An

Assuming the 90 days trading horizon Mechanics Construction and is expected to under-perform the Long An. But the stock apears to be less risky and, when comparing its historical volatility, Mechanics Construction and is 1.15 times less risky than Long An. The stock trades about -0.01 of its potential returns per unit of risk. The Long An Food is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,745,000  in Long An Food on September 15, 2024 and sell it today you would earn a total of  15,000  from holding Long An Food or generate 0.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.56%
Values	Daily Returns

Mechanics Construction and  vs.  Long An Food

Mechanics Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mechanics Construction and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Mechanics Construction is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Long An Food

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Long An Food are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Long An is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mechanics Construction and Long An

The main advantage of trading using opposite Mechanics Construction and Long An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mechanics Construction position performs unexpectedly, Long An 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 Long An will offset losses from the drop in Long An's long position.

The idea behind Mechanics Construction and and Long An Food 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.