Correlation Between Ihuman and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Ihuman and Lululemon Athletica 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 Ihuman and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ihuman Inc and Lululemon Athletica, you can compare the effects of market volatilities on Ihuman and Lululemon Athletica 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 Ihuman with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ihuman and Lululemon Athletica.
Diversification Opportunities for Ihuman and Lululemon Athletica
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ihuman and Lululemon is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ihuman Inc and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and Ihuman 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 Ihuman Inc are associated (or correlated) with Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of Ihuman i.e., Ihuman and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Ihuman and Lululemon Athletica
Allowing for the 90-day total investment horizon Ihuman Inc is expected to under-perform the Lululemon Athletica. In addition to that, Ihuman is 1.59 times more volatile than Lululemon Athletica. It trades about -0.02 of its total potential returns per unit of risk. Lululemon Athletica is currently generating about 0.03 per unit of volatility. If you would invest 30,662 in Lululemon Athletica on September 1, 2024 and sell it today you would earn a total of 1,404 from holding Lululemon Athletica or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ihuman Inc vs. Lululemon Athletica
Performance |
| Timeline |
| Ihuman Inc |
| Lululemon Athletica |
Ihuman and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ihuman and Lululemon Athletica
The main advantage of trading using opposite Ihuman and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ihuman position performs unexpectedly, Lululemon Athletica 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 Lululemon Athletica will offset losses from the drop in Lululemon Athletica's long position.| Ihuman vs. Boqii Holding Limited | Ihuman vs. Lixiang Education Holding | Ihuman vs. Huize Holding | Ihuman vs. Kuke Music Holding |
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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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