Correlation Between Lifevantage and Li Bang

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

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

Diversification Opportunities for Lifevantage and Li Bang

-0.4

Correlation Coefficient

Lifevantage  Li Bang

Very good diversification

The 3 months correlation between Lifevantage and LBGJ is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage 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 Lifevantage 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 Lifevantage 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 Lifevantage i.e., Lifevantage and Li Bang go up and down completely randomly.

Pair Corralation between Lifevantage and Li Bang

Given the investment horizon of 90 days Lifevantage is expected to generate 1.21 times more return on investment than Li Bang. However, Lifevantage is 1.21 times more volatile than Li Bang International. It trades about 0.39 of its potential returns per unit of risk. Li Bang International is currently generating about 0.0 per unit of risk. If you would invest  1,635  in Lifevantage on October 23, 2024 and sell it today you would earn a total of  896.00  from holding Lifevantage or generate 54.8% return on investment over 90 days.

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

Lifevantage  vs.  Li Bang International

Lifevantage

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lifevantage displayed 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 weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively steady which may send shares a bit higher in February 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Pair Trading with Lifevantage and Li Bang

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

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.