Correlation Between Lufax Holding and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Lufax Holding and Goldman Sachs 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 Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lufax Holding and Goldman Sachs Group, you can compare the effects of market volatilities on Lufax Holding and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lufax Holding and Goldman Sachs.
Diversification Opportunities for Lufax Holding and Goldman Sachs
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lufax and Goldman is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lufax Holding and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Group has no effect on the direction of Lufax Holding i.e., Lufax Holding and Goldman Sachs go up and down completely randomly.
Pair Corralation between Lufax Holding and Goldman Sachs
Allowing for the 90-day total investment horizon Lufax Holding is expected to under-perform the Goldman Sachs. In addition to that, Lufax Holding is 2.07 times more volatile than Goldman Sachs Group. It trades about -0.15 of its total potential returns per unit of risk. Goldman Sachs Group is currently generating about 0.17 per unit of volatility. If you would invest 48,956 in Goldman Sachs Group on November 1, 2024 and sell it today you would earn a total of 14,782 from holding Goldman Sachs Group or generate 30.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lufax Holding vs. Goldman Sachs Group
Performance |
| Timeline |
| Lufax Holding |
| Goldman Sachs Group |
Lufax Holding and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lufax Holding and Goldman Sachs
The main advantage of trading using opposite Lufax Holding and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lufax Holding position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.The idea behind Lufax Holding and Goldman Sachs Group 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.| Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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