Correlation Between Broadridge Financial and Lichen China
Can any of the company-specific risk be diversified away by investing in both Broadridge Financial 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 Broadridge Financial and Lichen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadridge Financial Solutions and Lichen China Limited, you can compare the effects of market volatilities on Broadridge Financial 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 Broadridge Financial with a short position of Lichen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadridge Financial and Lichen China.
Diversification Opportunities for Broadridge Financial and Lichen China
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Broadridge and Lichen is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions 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 Broadridge Financial 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 Broadridge Financial Solutions 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 Broadridge Financial i.e., Broadridge Financial and Lichen China go up and down completely randomly.
Pair Corralation between Broadridge Financial and Lichen China
Allowing for the 90-day total investment horizon Broadridge Financial Solutions is expected to generate 0.2 times more return on investment than Lichen China. However, Broadridge Financial Solutions is 4.96 times less risky than Lichen China. It trades about 0.23 of its potential returns per unit of risk. Lichen China Limited is currently generating about 0.04 per unit of risk. If you would invest 21,175 in Broadridge Financial Solutions on August 27, 2024 and sell it today you would earn a total of 2,148 from holding Broadridge Financial Solutions or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broadridge Financial Solutions vs. Lichen China Limited
Performance |
| Timeline |
| Broadridge Financial |
| Lichen China Limited |
Broadridge Financial and Lichen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadridge Financial and Lichen China
The main advantage of trading using opposite Broadridge Financial and Lichen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadridge Financial 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.| Broadridge Financial vs. Oneconnect Financial Technology | Broadridge Financial vs. Global Business Travel | Broadridge Financial vs. Alight Inc | Broadridge Financial vs. CS Disco LLC |
| Lichen China vs. Genpact Limited | Lichen China vs. Broadridge Financial Solutions | Lichen China vs. First Advantage Corp | Lichen China vs. Franklin Covey |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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