Correlation Between Unifirst and Lichen China
Can any of the company-specific risk be diversified away by investing in both Unifirst 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 Unifirst and Lichen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unifirst and Lichen China Limited, you can compare the effects of market volatilities on Unifirst 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 Unifirst with a short position of Lichen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unifirst and Lichen China.
Diversification Opportunities for Unifirst and Lichen China
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Unifirst and Lichen is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Unifirst 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 Unifirst 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 Unifirst 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 Unifirst i.e., Unifirst and Lichen China go up and down completely randomly.
Pair Corralation between Unifirst and Lichen China
Considering the 90-day investment horizon Unifirst is expected to generate 9.45 times less return on investment than Lichen China. But when comparing it to its historical volatility, Unifirst is 4.96 times less risky than Lichen China. It trades about 0.02 of its potential returns per unit of risk. Lichen China Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 350.00 in Lichen China Limited on August 24, 2024 and sell it today you would lose (134.00) from holding Lichen China Limited or give up 38.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.53% |
| Values | Daily Returns |
Unifirst vs. Lichen China Limited
Performance |
| Timeline |
| Unifirst |
| Lichen China Limited |
Unifirst and Lichen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unifirst and Lichen China
The main advantage of trading using opposite Unifirst and Lichen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unifirst 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.| Unifirst vs. AZZ Incorporated | Unifirst vs. BrightView Holdings | Unifirst vs. Maximus | Unifirst vs. Network 1 Technologies |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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