Correlation Between LINGYI ITECH and L3Harris Technologies

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Can any of the company-specific risk be diversified away by investing in both LINGYI ITECH and L3Harris Technologies 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 LINGYI ITECH and L3Harris Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LINGYI ITECH GUAN and L3Harris Technologies, you can compare the effects of market volatilities on LINGYI ITECH and L3Harris Technologies 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 LINGYI ITECH with a short position of L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LINGYI ITECH and L3Harris Technologies.

Diversification Opportunities for LINGYI ITECH and L3Harris Technologies

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between LINGYI and L3Harris is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding LINGYI ITECH GUAN and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies and LINGYI ITECH 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 LINGYI ITECH GUAN are associated (or correlated) with L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of LINGYI ITECH i.e., LINGYI ITECH and L3Harris Technologies go up and down completely randomly.

Pair Corralation between LINGYI ITECH and L3Harris Technologies

Assuming the 90 days trading horizon LINGYI ITECH GUAN is expected to generate 1.31 times more return on investment than L3Harris Technologies. However, LINGYI ITECH is 1.31 times more volatile than L3Harris Technologies. It trades about 0.22 of its potential returns per unit of risk. L3Harris Technologies is currently generating about 0.04 per unit of risk. If you would invest  467.00  in LINGYI ITECH GUAN on April 3, 2022 and sell it today you would earn a total of  35.00  from holding LINGYI ITECH GUAN or generate 7.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy72.73%
ValuesDaily Returns

LINGYI ITECH GUAN  vs.  L3Harris Technologies

 Performance (%) 
      Timeline 
LINGYI ITECH GUAN 
LINGYI Performance
0 of 100
Over the last 90 days LINGYI ITECH GUAN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LINGYI ITECH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

LINGYI Price Channel

L3Harris Technologies 
L3Harris Performance
0 of 100
Over the last 90 days L3Harris Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, L3Harris Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0188
Payout Ratio
0.33
Last Split Factor
10000:9448
Forward Annual Dividend Rate
4.48
Dividend Date
2022-06-17
Ex Dividend Date
2022-06-02
Last Split Date
2009-05-11

L3Harris Price Channel

LINGYI ITECH and L3Harris Technologies Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with LINGYI ITECH and L3Harris Technologies

The main advantage of trading using opposite LINGYI ITECH and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LINGYI ITECH position performs unexpectedly, L3Harris Technologies 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.

LINGYI ITECH GUAN

Pair trading matchups for LINGYI ITECH

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against LINGYI ITECH as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. LINGYI ITECH's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, LINGYI ITECH's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to LINGYI ITECH GUAN.
The idea behind LINGYI ITECH GUAN and L3Harris Technologies 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.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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