Correlation Between Lichen China and Eastman Kodak
Can any of the company-specific risk be diversified away by investing in both Lichen China and Eastman Kodak 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 Eastman Kodak 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 Eastman Kodak Co, you can compare the effects of market volatilities on Lichen China and Eastman Kodak 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 Eastman Kodak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lichen China and Eastman Kodak.
Diversification Opportunities for Lichen China and Eastman Kodak
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lichen and Eastman is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lichen China Limited and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak 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 Eastman Kodak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Kodak has no effect on the direction of Lichen China i.e., Lichen China and Eastman Kodak go up and down completely randomly.
Pair Corralation between Lichen China and Eastman Kodak
Given the investment horizon of 90 days Lichen China Limited is expected to generate 2.14 times more return on investment than Eastman Kodak. However, Lichen China is 2.14 times more volatile than Eastman Kodak Co. It trades about 0.03 of its potential returns per unit of risk. Eastman Kodak Co is currently generating about 0.04 per unit of risk. If you would invest 350.00 in Lichen China Limited on August 27, 2024 and sell it today you would lose (134.00) from holding Lichen China Limited or give up 38.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lichen China Limited vs. Eastman Kodak Co
Performance |
| Timeline |
| Lichen China Limited |
| Eastman Kodak |
Lichen China and Eastman Kodak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lichen China and Eastman Kodak
The main advantage of trading using opposite Lichen China and Eastman Kodak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lichen China position performs unexpectedly, Eastman Kodak 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 Eastman Kodak will offset losses from the drop in Eastman Kodak's long position.| Lichen China vs. Genpact Limited | Lichen China vs. Broadridge Financial Solutions | Lichen China vs. First Advantage Corp | Lichen China vs. Franklin Covey |
| Eastman Kodak vs. SMX Public Limited | Eastman Kodak vs. System1 | Eastman Kodak vs. Lichen China Limited | Eastman Kodak vs. Team Inc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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