Correlation Between RDE, and Lizhi

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

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

Diversification Opportunities for RDE, and Lizhi

-0.1

Correlation Coefficient

RDE,  Lizhi

Good diversification

The 3 months correlation between RDE, and Lizhi is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding RDE, Inc and Lizhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhi Inc and RDE, 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 RDE, Inc 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 RDE, i.e., RDE, and Lizhi go up and down completely randomly.

Pair Corralation between RDE, and Lizhi

Given the investment horizon of 90 days RDE, Inc is expected to under-perform the Lizhi. But the stock apears to be less risky and, when comparing its historical volatility, RDE, Inc is 1.35 times less risky than Lizhi. The stock trades about -0.28 of its potential returns per unit of risk. The 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 9, 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

RDE, Inc  vs.  Lizhi Inc

RDE, Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RDE, Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 uncertain technical and fundamental indicators, Lizhi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with RDE, and Lizhi

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

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.