Correlation Between Team and Lichen China
Can any of the company-specific risk be diversified away by investing in both Team 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 Team and Lichen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Team Inc and Lichen China Limited, you can compare the effects of market volatilities on Team 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 Team with a short position of Lichen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Team and Lichen China.
Diversification Opportunities for Team and Lichen China
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Team and Lichen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Team Inc 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 Team 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 Team Inc 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 Team i.e., Team and Lichen China go up and down completely randomly.
Pair Corralation between Team and Lichen China
Given the investment horizon of 90 days Team Inc is expected to generate 0.49 times more return on investment than Lichen China. However, Team Inc is 2.06 times less risky than Lichen China. It trades about 0.25 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 1,369 in Team Inc on November 3, 2024 and sell it today you would earn a total of 311.00 from holding Team Inc or generate 22.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Team Inc vs. Lichen China Limited
Performance |
| Timeline |
| Team Inc |
| Lichen China Limited |
Team and Lichen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Team and Lichen China
The main advantage of trading using opposite Team and Lichen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Team 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.The idea behind Team Inc and Lichen China Limited 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.| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |