Correlation Between BrightView Holdings and Lichen China

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

Diversification Opportunities for BrightView Holdings and Lichen China

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between BrightView and Lichen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BrightView Holdings 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 BrightView Holdings 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 BrightView Holdings 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 BrightView Holdings i.e., BrightView Holdings and Lichen China go up and down completely randomly.

Pair Corralation between BrightView Holdings and Lichen China

Allowing for the 90-day total investment horizon BrightView Holdings is expected to generate 0.19 times more return on investment than Lichen China. However, BrightView Holdings is 5.14 times less risky than Lichen China. It trades about -0.08 of its potential returns per unit of risk. Lichen China Limited is currently generating about -0.36 per unit of risk. If you would invest  1,838  in BrightView Holdings on September 13, 2024 and sell it today you would lose (130.00) from holding BrightView Holdings or give up 7.07% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BrightView Holdings  vs.  Lichen China Limited

 Performance 
       Timeline  
BrightView Holdings 

Risk-Adjusted Performance

7 of 100

 
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Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BrightView Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BrightView Holdings showed solid returns over the last few months and may actually be approaching a breakup point.
Lichen China Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lichen China Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

BrightView Holdings and Lichen China Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BrightView Holdings and Lichen China

The main advantage of trading using opposite BrightView Holdings and Lichen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BrightView Holdings 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.
The idea behind BrightView Holdings and Lichen China Limited 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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