Correlation Between TrueCar and Lizhi
Can any of the company-specific risk be diversified away by investing in both TrueCar and Lizhi 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 TrueCar and Lizhi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TrueCar and Lizhi Inc, you can compare the effects of market volatilities on TrueCar and Lizhi 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 TrueCar with a short position of Lizhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of TrueCar and Lizhi.
Diversification Opportunities for TrueCar and Lizhi
Very weak diversification
The 3 months correlation between TrueCar and Lizhi is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding TrueCar and Lizhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhi Inc and TrueCar 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 TrueCar are associated (or correlated) with Lizhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lizhi Inc has no effect on the direction of TrueCar i.e., TrueCar and Lizhi go up and down completely randomly.
Pair Corralation between TrueCar and Lizhi
If you would invest 353.00 in TrueCar on August 24, 2024 and sell it today you would earn a total of 44.00 from holding TrueCar or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
TrueCar vs. Lizhi Inc
Performance |
| Timeline |
| TrueCar |
| Lizhi Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
TrueCar and Lizhi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TrueCar and Lizhi
The main advantage of trading using opposite TrueCar and Lizhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TrueCar position performs unexpectedly, Lizhi 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 Lizhi will offset losses from the drop in Lizhi's long position.The idea behind TrueCar and Lizhi Inc 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.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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