Correlation Between Lichen China and ALJ Regional
Can any of the company-specific risk be diversified away by investing in both Lichen China and ALJ Regional 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 Lichen China and ALJ Regional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lichen China Limited and ALJ Regional Holdings, you can compare the effects of market volatilities on Lichen China and ALJ Regional 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 Lichen China with a short position of ALJ Regional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lichen China and ALJ Regional.
Diversification Opportunities for Lichen China and ALJ Regional
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lichen and ALJ is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lichen China Limited and ALJ Regional Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALJ Regional Holdings and Lichen China 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 Lichen China Limited are associated (or correlated) with ALJ Regional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALJ Regional Holdings has no effect on the direction of Lichen China i.e., Lichen China and ALJ Regional go up and down completely randomly.
Pair Corralation between Lichen China and ALJ Regional
If you would invest 190.00 in Lichen China Limited on August 31, 2024 and sell it today you would lose (3.00) from holding Lichen China Limited or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.27% |
| Values | Daily Returns |
Lichen China Limited vs. ALJ Regional Holdings
Performance |
| Timeline |
| Lichen China Limited |
| ALJ Regional Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lichen China and ALJ Regional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lichen China and ALJ Regional
The main advantage of trading using opposite Lichen China and ALJ Regional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lichen China position performs unexpectedly, ALJ Regional 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 ALJ Regional will offset losses from the drop in ALJ Regional's long position.| Lichen China vs. First Advantage Corp | Lichen China vs. Discount Print USA | Lichen China vs. Cass Information Systems | Lichen China vs. Civeo Corp |
| ALJ Regional vs. Dexterra Group | ALJ Regional vs. Intertek Group Plc | ALJ Regional vs. Wildpack Beverage | ALJ Regional vs. DATA Communications Management |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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