Correlation Between Lufax Holding and Futu Holdings
Can any of the company-specific risk be diversified away by investing in both Lufax Holding and Futu Holdings 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 Lufax Holding and Futu Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lufax Holding and Futu Holdings, you can compare the effects of market volatilities on Lufax Holding and Futu Holdings 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 Lufax Holding with a short position of Futu Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lufax Holding and Futu Holdings.
Diversification Opportunities for Lufax Holding and Futu Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lufax and Futu is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lufax Holding and Futu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futu Holdings and Lufax 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 Lufax Holding are associated (or correlated) with Futu Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futu Holdings has no effect on the direction of Lufax Holding i.e., Lufax Holding and Futu Holdings go up and down completely randomly.
Pair Corralation between Lufax Holding and Futu Holdings
Allowing for the 90-day total investment horizon Lufax Holding is expected to generate 2.67 times less return on investment than Futu Holdings. In addition to that, Lufax Holding is 1.45 times more volatile than Futu Holdings. It trades about 0.02 of its total potential returns per unit of risk. Futu Holdings is currently generating about 0.07 per unit of volatility. If you would invest 4,037 in Futu Holdings on August 31, 2024 and sell it today you would earn a total of 4,686 from holding Futu Holdings or generate 116.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lufax Holding vs. Futu Holdings
Performance |
| Timeline |
| Lufax Holding |
| Futu Holdings |
Lufax Holding and Futu Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lufax Holding and Futu Holdings
The main advantage of trading using opposite Lufax Holding and Futu Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lufax Holding position performs unexpectedly, Futu Holdings 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 Futu Holdings will offset losses from the drop in Futu Holdings' long position.| Lufax Holding vs. 360 Finance | Lufax Holding vs. FinVolution Group | Lufax Holding vs. Qudian Inc | Lufax Holding vs. X Financial Class |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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