Correlation Between Trump Media and Lizhi

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

By analyzing existing cross correlation between Trump Media Technology and Lizhi Inc, you can compare the effects of market volatilities on Trump Media 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 Trump Media with a short position of Lizhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trump Media and Lizhi.

Diversification Opportunities for Trump Media and Lizhi

-0.41

Correlation Coefficient

Trump Media  Lizhi

Very good diversification

The 3 months correlation between Trump and Lizhi is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Trump Media Technology and Lizhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhi Inc and Trump 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 Trump Media Technology 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 Trump Media i.e., Trump Media and Lizhi go up and down completely randomly.

Pair Corralation between Trump Media and Lizhi

Assuming the 90 days horizon Trump Media is expected to generate 5.38 times less return on investment than Lizhi. But when comparing it to its historical volatility, Trump Media Technology is 2.3 times less risky than Lizhi. It trades about 0.05 of its potential returns per unit of risk. Lizhi Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  183.00  in Lizhi Inc on October 8, 2024 and sell it today you would earn a total of  26.00  from holding Lizhi Inc or generate 14.21% return on investment over 90 days.

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

Trump Media Technology  vs.  Lizhi Inc

Trump Media Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trump Media Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Trump Media showed solid returns over the last few months and may actually be approaching a breakup point.

Lizhi Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lizhi Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Lizhi is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Trump Media and Lizhi

The main advantage of trading using opposite Trump Media and Lizhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trump Media 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 Trump Media Technology 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.