Correlation Between Trump Media and Lizhi
Can any of the company-specific risk be diversified away by investing in both Trump Media and Lizhi 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 Trump Media and Lizhi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trump Media Technology and Lizhi Inc, you can compare the effects of market volatilities on Trump Media and Lizhi 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 Trump Media with a short position of Lizhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trump Media and Lizhi.
Diversification Opportunities for Trump Media and Lizhi
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Trump and Lizhi is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Trump Media Technology and Lizhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhi Inc and Trump Media 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 Trump Media Technology are associated (or correlated) with Lizhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lizhi Inc has no effect on the direction of Trump Media i.e., Trump Media and Lizhi go up and down completely randomly.
Pair Corralation between Trump Media and Lizhi
Considering the 90-day investment horizon Trump Media Technology is expected to under-perform the Lizhi. But the stock apears to be less risky and, when comparing its historical volatility, Trump Media Technology is 1.03 times less risky than Lizhi. The stock trades about -0.02 of its potential returns per unit of risk. The Lizhi Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 202.00 in Lizhi Inc on October 25, 2024 and sell it today you would earn a total of 8.00 from holding Lizhi Inc or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trump Media Technology vs. Lizhi Inc
Performance |
| Timeline |
| Trump Media Technology |
| Lizhi Inc |
Trump Media and Lizhi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trump Media and Lizhi
The main advantage of trading using opposite Trump Media and Lizhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trump Media position performs unexpectedly, Lizhi 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 Lizhi will offset losses from the drop in Lizhi's long position.| Trump Media vs. Western Digital | Trump Media vs. Walt Disney | Trump Media vs. Century Aluminum | Trump Media vs. Kulicke and Soffa |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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