Correlation Between Gap, and Li Bang

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

By analyzing existing cross correlation between The Gap, and Li Bang International, you can compare the effects of market volatilities on Gap, and Li Bang 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 Gap, with a short position of Li Bang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and Li Bang.

Diversification Opportunities for Gap, and Li Bang

0.0

Correlation Coefficient

Gap,  Li Bang

Pay attention - limited upside

The 3 months correlation between Gap, and LBGJ is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Li Bang International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Bang International and Gap, 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 The Gap, are associated (or correlated) with Li Bang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Bang International has no effect on the direction of Gap, i.e., Gap, and Li Bang go up and down completely randomly.

Pair Corralation between Gap, and Li Bang

Considering the 90-day investment horizon Gap, is expected to generate 1.05 times less return on investment than Li Bang. But when comparing it to its historical volatility, The Gap, is 3.07 times less risky than Li Bang. It trades about 0.21 of its potential returns per unit of risk. Li Bang International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  319.00  in Li Bang International on September 19, 2024 and sell it today you would earn a total of  12.00  from holding Li Bang International or generate 3.76% return on investment over 90 days.

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

The Gap,  vs.  Li Bang International

Gap,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

Li Bang International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Li Bang International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical and fundamental indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Pair Trading with Gap, and Li Bang

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

The idea behind The Gap, and Li Bang International 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.