Correlation Between All American and Lichen China
Can any of the company-specific risk be diversified away by investing in both All American and Lichen China 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 All American and Lichen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between All American Pet and Lichen China Limited, you can compare the effects of market volatilities on All American and Lichen China 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 All American with a short position of Lichen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of All American and Lichen China.
Diversification Opportunities for All American and Lichen China
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between All and Lichen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding All American Pet and Lichen China Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lichen China Limited and All American 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 All American Pet are associated (or correlated) with Lichen China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lichen China Limited has no effect on the direction of All American i.e., All American and Lichen China go up and down completely randomly.
Pair Corralation between All American and Lichen China
If you would invest 0.00 in All American Pet on November 3, 2024 and sell it today you would earn a total of 0.00 from holding All American Pet or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
All American Pet vs. Lichen China Limited
Performance |
| Timeline |
| All American Pet |
| Lichen China Limited |
All American and Lichen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with All American and Lichen China
The main advantage of trading using opposite All American and Lichen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All American position performs unexpectedly, Lichen China 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 Lichen China will offset losses from the drop in Lichen China's long position.| All American vs. International Consolidated Companies | All American vs. Frontera Group | All American vs. XCPCNL Business Services | All American vs. Aramark Holdings |
| Lichen China vs. First Advantage Corp | Lichen China vs. Discount Print USA | Lichen China vs. Cass Information Systems | Lichen China vs. Civeo Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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