Correlation Between LightInTheBox Holding and Natural Health

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Can any of the company-specific risk be diversified away by investing in both LightInTheBox Holding and Natural Health 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 LightInTheBox Holding and Natural Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LightInTheBox Holding Co and Natural Health Trend, you can compare the effects of market volatilities on LightInTheBox Holding and Natural Health 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 LightInTheBox Holding with a short position of Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of LightInTheBox Holding and Natural Health.

Diversification Opportunities for LightInTheBox Holding and Natural Health

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between LightInTheBox and Natural is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding LightInTheBox Holding Co and Natural Health Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trend and LightInTheBox Holding 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 LightInTheBox Holding Co are associated (or correlated) with Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trend has no effect on the direction of LightInTheBox Holding i.e., LightInTheBox Holding and Natural Health go up and down completely randomly.

Pair Corralation between LightInTheBox Holding and Natural Health

Given the investment horizon of 90 days LightInTheBox Holding Co is expected to under-perform the Natural Health. In addition to that, LightInTheBox Holding is 2.61 times more volatile than Natural Health Trend. It trades about -0.33 of its total potential returns per unit of risk. Natural Health Trend is currently generating about 0.16 per unit of volatility. If you would invest  457.00  in Natural Health Trend on November 2, 2024 and sell it today you would earn a total of  38.00  from holding Natural Health Trend or generate 8.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

LightInTheBox Holding Co  vs.  Natural Health Trend

 Performance 
       Timeline  
LightInTheBox Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LightInTheBox Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Natural Health Trend 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Natural Health Trend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

LightInTheBox Holding and Natural Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LightInTheBox Holding and Natural Health

The main advantage of trading using opposite LightInTheBox Holding and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LightInTheBox Holding position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.
The idea behind LightInTheBox Holding Co and Natural Health Trend pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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