Correlation Between Liquidity Services and Oriental Culture
Can any of the company-specific risk be diversified away by investing in both Liquidity Services and Oriental Culture 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 Liquidity Services and Oriental Culture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liquidity Services and Oriental Culture Holding, you can compare the effects of market volatilities on Liquidity Services and Oriental Culture 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 Liquidity Services with a short position of Oriental Culture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liquidity Services and Oriental Culture.
Diversification Opportunities for Liquidity Services and Oriental Culture
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Liquidity and Oriental is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Liquidity Services and Oriental Culture Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Culture Holding and Liquidity Services 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 Liquidity Services are associated (or correlated) with Oriental Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Culture Holding has no effect on the direction of Liquidity Services i.e., Liquidity Services and Oriental Culture go up and down completely randomly.
Pair Corralation between Liquidity Services and Oriental Culture
Given the investment horizon of 90 days Liquidity Services is expected to generate 0.29 times more return on investment than Oriental Culture. However, Liquidity Services is 3.5 times less risky than Oriental Culture. It trades about 0.36 of its potential returns per unit of risk. Oriental Culture Holding is currently generating about -0.06 per unit of risk. If you would invest 2,167 in Liquidity Services on August 24, 2024 and sell it today you would earn a total of 351.00 from holding Liquidity Services or generate 16.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liquidity Services vs. Oriental Culture Holding
Performance |
| Timeline |
| Liquidity Services |
| Oriental Culture Holding |
Liquidity Services and Oriental Culture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liquidity Services and Oriental Culture
The main advantage of trading using opposite Liquidity Services and Oriental Culture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liquidity Services position performs unexpectedly, Oriental Culture 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 Oriental Culture will offset losses from the drop in Oriental Culture's long position.| Liquidity Services vs. Qurate Retail Series | Liquidity Services vs. Qurate Retail | Liquidity Services vs. Dada Nexus | Liquidity Services vs. Natural Health Trend |
| Oriental Culture vs. Hour Loop | Oriental Culture vs. Jowell Global | Oriental Culture vs. Qurate Retail Series | Oriental Culture vs. Emerge Commerce |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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