Correlation Between Thinkingdom Media and Lepu Medical

Can any of the company-specific risk be diversified away by investing in both Thinkingdom Media and Lepu Medical 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 Thinkingdom Media and Lepu Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thinkingdom Media Group and Lepu Medical Tech, you can compare the effects of market volatilities on Thinkingdom Media and Lepu Medical 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 Thinkingdom Media with a short position of Lepu Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thinkingdom Media and Lepu Medical.

Diversification Opportunities for Thinkingdom Media and Lepu Medical

-0.08

Correlation Coefficient

Thinkingdom Media  Lepu Medical

Good diversification

The 3 months correlation between Thinkingdom and Lepu is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Thinkingdom Media Group and Lepu Medical Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepu Medical Tech and Thinkingdom Media 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 Thinkingdom Media Group are associated (or correlated) with Lepu Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lepu Medical Tech has no effect on the direction of Thinkingdom Media i.e., Thinkingdom Media and Lepu Medical go up and down completely randomly.

Pair Corralation between Thinkingdom Media and Lepu Medical

Assuming the 90 days trading horizon Thinkingdom Media Group is expected to under-perform the Lepu Medical. In addition to that, Thinkingdom Media is 1.17 times more volatile than Lepu Medical Tech. It trades about 0.0 of its total potential returns per unit of risk. Lepu Medical Tech is currently generating about 0.02 per unit of volatility. If you would invest  1,170  in Lepu Medical Tech on December 28, 2024 and sell it today you would earn a total of  9.00  from holding Lepu Medical Tech or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Thinkingdom Media Group  vs.  Lepu Medical Tech

Thinkingdom Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thinkingdom Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Thinkingdom Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lepu Medical Tech

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lepu Medical Tech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lepu Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thinkingdom Media and Lepu Medical

The main advantage of trading using opposite Thinkingdom Media and Lepu Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thinkingdom Media position performs unexpectedly, Lepu Medical 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 Lepu Medical will offset losses from the drop in Lepu Medical's long position.

The idea behind Thinkingdom Media Group and Lepu Medical Tech 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.