Correlation Between Discount Print and Lichen China
Can any of the company-specific risk be diversified away by investing in both Discount Print 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 Discount Print and Lichen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Discount Print USA and Lichen China Limited, you can compare the effects of market volatilities on Discount Print 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 Discount Print with a short position of Lichen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discount Print and Lichen China.
Diversification Opportunities for Discount Print and Lichen China
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Discount and Lichen is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Discount Print USA 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 Discount Print 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 Discount Print USA 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 Discount Print i.e., Discount Print and Lichen China go up and down completely randomly.
Pair Corralation between Discount Print and Lichen China
Given the investment horizon of 90 days Discount Print USA is expected to under-perform the Lichen China. In addition to that, Discount Print is 2.39 times more volatile than Lichen China Limited. It trades about -0.01 of its total potential returns per unit of risk. Lichen China Limited is currently generating about 0.02 per unit of volatility. If you would invest 187.00 in Lichen China Limited on August 28, 2024 and sell it today you would lose (3.00) from holding Lichen China Limited or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discount Print USA vs. Lichen China Limited
Performance |
| Timeline |
| Discount Print USA |
| Lichen China Limited |
Discount Print and Lichen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discount Print and Lichen China
The main advantage of trading using opposite Discount Print and Lichen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discount Print 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.| Discount Print vs. AAP Inc | Discount Print vs. bioAffinity Technologies Warrant | Discount Print vs. Millennium Investment Acquisition |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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