Correlation Between De Licacy and Li Peng
Can any of the company-specific risk be diversified away by investing in both De Licacy and Li Peng 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 De Licacy and Li Peng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Licacy Industrial and Li Peng Enterprise, you can compare the effects of market volatilities on De Licacy and Li Peng 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 De Licacy with a short position of Li Peng. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Licacy and Li Peng.
Diversification Opportunities for De Licacy and Li Peng
Very good diversification
The 3 months correlation between 1464 and 1447 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding De Licacy Industrial and Li Peng Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Peng Enterprise and De Licacy 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 De Licacy Industrial are associated (or correlated) with Li Peng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Peng Enterprise has no effect on the direction of De Licacy i.e., De Licacy and Li Peng go up and down completely randomly.
Pair Corralation between De Licacy and Li Peng
Assuming the 90 days trading horizon De Licacy Industrial is expected to generate 1.24 times more return on investment than Li Peng. However, De Licacy is 1.24 times more volatile than Li Peng Enterprise. It trades about 0.18 of its potential returns per unit of risk. Li Peng Enterprise is currently generating about 0.11 per unit of risk. If you would invest 1,650 in De Licacy Industrial on November 4, 2024 and sell it today you would earn a total of 70.00 from holding De Licacy Industrial or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Licacy Industrial vs. Li Peng Enterprise
Performance |
| Timeline |
| De Licacy Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Li Peng Enterprise |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
De Licacy and Li Peng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Licacy and Li Peng
The main advantage of trading using opposite De Licacy and Li Peng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Licacy position performs unexpectedly, Li Peng 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 Li Peng will offset losses from the drop in Li Peng's long position.The idea behind De Licacy Industrial and Li Peng Enterprise 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 the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |