Correlation Between Network 1 and Lichen China
Can any of the company-specific risk be diversified away by investing in both Network 1 and Lichen China 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 Network 1 and Lichen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Network 1 Technologies and Lichen China Limited, you can compare the effects of market volatilities on Network 1 and Lichen China 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 Network 1 with a short position of Lichen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network 1 and Lichen China.
Diversification Opportunities for Network 1 and Lichen China
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Network and Lichen is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Network 1 Technologies and Lichen China Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lichen China Limited and Network 1 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 Network 1 Technologies are associated (or correlated) with Lichen China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lichen China Limited has no effect on the direction of Network 1 i.e., Network 1 and Lichen China go up and down completely randomly.
Pair Corralation between Network 1 and Lichen China
Given the investment horizon of 90 days Network 1 Technologies is expected to generate 0.16 times more return on investment than Lichen China. However, Network 1 Technologies is 6.42 times less risky than Lichen China. It trades about -0.14 of its potential returns per unit of risk. Lichen China Limited is currently generating about -0.37 per unit of risk. If you would invest 142.00 in Network 1 Technologies on November 3, 2024 and sell it today you would lose (6.00) from holding Network 1 Technologies or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Network 1 Technologies vs. Lichen China Limited
Performance |
| Timeline |
| Network 1 Technologies |
| Lichen China Limited |
Network 1 and Lichen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Network 1 and Lichen China
The main advantage of trading using opposite Network 1 and Lichen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network 1 position performs unexpectedly, Lichen China 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 Lichen China will offset losses from the drop in Lichen China's long position.| Network 1 vs. Civeo Corp | Network 1 vs. BrightView Holdings | Network 1 vs. Maximus | Network 1 vs. CBIZ Inc |
| Lichen China vs. First Advantage Corp | Lichen China vs. Discount Print USA | Lichen China vs. Cass Information Systems | Lichen China vs. Civeo Corp |
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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