Correlation Between Li Bang and ATRenew

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

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

Diversification Opportunities for Li Bang and ATRenew

-0.19

Correlation Coefficient

Li Bang  ATRenew

Good diversification

The 3 months correlation between LBGJ and ATRenew is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Li Bang International and ATRenew Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRenew Inc DRC and Li Bang 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 Li Bang International are associated (or correlated) with ATRenew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRenew Inc DRC has no effect on the direction of Li Bang i.e., Li Bang and ATRenew go up and down completely randomly.

Pair Corralation between Li Bang and ATRenew

Given the investment horizon of 90 days Li Bang is expected to generate 1.37 times less return on investment than ATRenew. In addition to that, Li Bang is 1.94 times more volatile than ATRenew Inc DRC. It trades about 0.07 of its total potential returns per unit of risk. ATRenew Inc DRC is currently generating about 0.19 per unit of volatility. If you would invest  247.00  in ATRenew Inc DRC on September 19, 2024 and sell it today you would earn a total of  55.00  from holding ATRenew Inc DRC or generate 22.27% return on investment over 90 days.

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

Li Bang International  vs.  ATRenew Inc DRC

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.

ATRenew Inc DRC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATRenew Inc DRC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ATRenew exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Li Bang and ATRenew

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

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