Correlation Between Lizhi and BuzzFeed
Can any of the company-specific risk be diversified away by investing in both Lizhi and BuzzFeed 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 Lizhi and BuzzFeed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lizhi Inc and BuzzFeed, you can compare the effects of market volatilities on Lizhi and BuzzFeed 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 Lizhi with a short position of BuzzFeed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lizhi and BuzzFeed.
Diversification Opportunities for Lizhi and BuzzFeed
Good diversification
The 3 months correlation between Lizhi and BuzzFeed is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lizhi Inc and BuzzFeed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BuzzFeed and Lizhi 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 Lizhi Inc are associated (or correlated) with BuzzFeed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BuzzFeed has no effect on the direction of Lizhi i.e., Lizhi and BuzzFeed go up and down completely randomly.
Pair Corralation between Lizhi and BuzzFeed
Given the investment horizon of 90 days Lizhi Inc is expected to under-perform the BuzzFeed. But the stock apears to be less risky and, when comparing its historical volatility, Lizhi Inc is 1.37 times less risky than BuzzFeed. The stock trades about -0.03 of its potential returns per unit of risk. The BuzzFeed is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 660.00 in BuzzFeed on November 5, 2024 and sell it today you would lose (416.00) from holding BuzzFeed or give up 63.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 22.42% |
| Values | Daily Returns |
Lizhi Inc vs. BuzzFeed
Performance |
| Timeline |
| Lizhi Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BuzzFeed |
Lizhi and BuzzFeed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lizhi and BuzzFeed
The main advantage of trading using opposite Lizhi and BuzzFeed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lizhi position performs unexpectedly, BuzzFeed 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 BuzzFeed will offset losses from the drop in BuzzFeed's long position.The idea behind Lizhi Inc and BuzzFeed 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.| BuzzFeed vs. MediaAlpha | BuzzFeed vs. Asset Entities Class | BuzzFeed vs. Yelp Inc | BuzzFeed vs. Shutterstock |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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