Correlation Between Xtrackers LevDAX and Lianhua Supermarket

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Lianhua Supermarket 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 Xtrackers LevDAX and Lianhua Supermarket into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Lianhua Supermarket Holdings, you can compare the effects of market volatilities on Xtrackers LevDAX and Lianhua Supermarket 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 Xtrackers LevDAX with a short position of Lianhua Supermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Lianhua Supermarket.

Diversification Opportunities for Xtrackers LevDAX and Lianhua Supermarket

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Xtrackers and Lianhua is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Lianhua Supermarket Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lianhua Supermarket and Xtrackers LevDAX 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 Xtrackers LevDAX are associated (or correlated) with Lianhua Supermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lianhua Supermarket has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Lianhua Supermarket go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and Lianhua Supermarket

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.56 times less return on investment than Lianhua Supermarket. But when comparing it to its historical volatility, Xtrackers LevDAX is 4.77 times less risky than Lianhua Supermarket. It trades about 0.22 of its potential returns per unit of risk. Lianhua Supermarket Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2.40  in Lianhua Supermarket Holdings on December 24, 2024 and sell it today you would earn a total of  0.45  from holding Lianhua Supermarket Holdings or generate 18.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Xtrackers LevDAX  vs.  Lianhua Supermarket Holdings

 Performance 
       Timeline  
Xtrackers LevDAX 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers LevDAX are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Xtrackers LevDAX reported solid returns over the last few months and may actually be approaching a breakup point.
Lianhua Supermarket 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Lianhua Supermarket Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lianhua Supermarket reported solid returns over the last few months and may actually be approaching a breakup point.

Xtrackers LevDAX and Lianhua Supermarket Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xtrackers LevDAX and Lianhua Supermarket

The main advantage of trading using opposite Xtrackers LevDAX and Lianhua Supermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Lianhua Supermarket 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 Lianhua Supermarket will offset losses from the drop in Lianhua Supermarket's long position.
The idea behind Xtrackers LevDAX and Lianhua Supermarket Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

Other Complementary Tools

Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm