Correlation Between Seneca Foods and LINGYI ITECH

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

Diversification Opportunities for Seneca Foods and LINGYI ITECH

0.31
  Correlation Coefficient

Weak diversification

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

Pair Corralation between Seneca Foods and LINGYI ITECH

Assuming the 90 days horizon Seneca Foods is expected to generate 1.34 times less return on investment than LINGYI ITECH. In addition to that, Seneca Foods is 1.21 times more volatile than LINGYI ITECH GUAN. It trades about 0.08 of its total potential returns per unit of risk. LINGYI ITECH GUAN is currently generating about 0.13 per unit of volatility. If you would invest  444.00  in LINGYI ITECH GUAN on May 12, 2022 and sell it today you would earn a total of  76.00  from holding LINGYI ITECH GUAN or generate 17.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy82.26%
ValuesDaily Returns

Seneca Foods Cp  vs.  LINGYI ITECH GUAN

 Performance (%) 
       Timeline  
Seneca Foods Cp 
Seneca Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Cp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Seneca Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Seneca Price Channel

LINGYI ITECH GUAN 
LINGYI Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in LINGYI ITECH GUAN are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LINGYI ITECH sustained solid returns over the last few months and may actually be approaching a breakup point.

LINGYI Price Channel

Seneca Foods and LINGYI ITECH Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Seneca Foods and LINGYI ITECH

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

Seneca Foods Cp

Pair trading matchups for Seneca Foods

The idea behind Seneca Foods Cp and LINGYI ITECH GUAN 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.

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.
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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