Correlation Between Lichen China and Network 1
Can any of the company-specific risk be diversified away by investing in both Lichen China and Network 1 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 Network 1 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 Network 1 Technologies, you can compare the effects of market volatilities on Lichen China and Network 1 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 Network 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lichen China and Network 1.
Diversification Opportunities for Lichen China and Network 1
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lichen and Network is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lichen China Limited and Network 1 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network 1 Technologies 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 Network 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network 1 Technologies has no effect on the direction of Lichen China i.e., Lichen China and Network 1 go up and down completely randomly.
Pair Corralation between Lichen China and Network 1
Given the investment horizon of 90 days Lichen China Limited is expected to under-perform the Network 1. In addition to that, Lichen China is 3.74 times more volatile than Network 1 Technologies. It trades about -0.02 of its total potential returns per unit of risk. Network 1 Technologies is currently generating about 0.09 per unit of volatility. If you would invest 131.00 in Network 1 Technologies on October 24, 2024 and sell it today you would earn a total of 5.00 from holding Network 1 Technologies or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lichen China Limited vs. Network 1 Technologies
Performance |
| Timeline |
| Lichen China Limited |
| Network 1 Technologies |
Lichen China and Network 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lichen China and Network 1
The main advantage of trading using opposite Lichen China and Network 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lichen China position performs unexpectedly, Network 1 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 Network 1 will offset losses from the drop in Network 1'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 |
| Network 1 vs. Civeo Corp | Network 1 vs. BrightView Holdings | Network 1 vs. Maximus | Network 1 vs. CBIZ 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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