Correlation Between First Advantage and Lichen China
Can any of the company-specific risk be diversified away by investing in both First Advantage 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 First Advantage and Lichen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Advantage Corp and Lichen China Limited, you can compare the effects of market volatilities on First Advantage 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 First Advantage with a short position of Lichen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Advantage and Lichen China.
Diversification Opportunities for First Advantage and Lichen China
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Lichen is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp 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 First Advantage 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 First Advantage Corp 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 First Advantage i.e., First Advantage and Lichen China go up and down completely randomly.
Pair Corralation between First Advantage and Lichen China
Allowing for the 90-day total investment horizon First Advantage Corp is expected to generate 0.2 times more return on investment than Lichen China. However, First Advantage Corp is 4.89 times less risky than Lichen China. It trades about 0.07 of its potential returns per unit of risk. Lichen China Limited is currently generating about -0.37 per unit of risk. If you would invest 1,843 in First Advantage Corp on November 3, 2024 and sell it today you would earn a total of 45.00 from holding First Advantage Corp or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Advantage Corp vs. Lichen China Limited
Performance |
| Timeline |
| First Advantage Corp |
| Lichen China Limited |
First Advantage and Lichen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Advantage and Lichen China
The main advantage of trading using opposite First Advantage and Lichen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Advantage 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.| First Advantage vs. Discount Print USA | First Advantage vs. Cass Information Systems | First Advantage vs. Civeo Corp | First Advantage vs. Network 1 Technologies |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |