Correlation Between Lion Financial and Ucommune International

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

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

Diversification Opportunities for Lion Financial and Ucommune International

-0.15

Correlation Coefficient

Lion Financial  Ucommune International

Good diversification

The 3 months correlation between Lion and Ucommune is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group and Ucommune International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ucommune International and Lion Financial 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 Lion Financial Group are associated (or correlated) with Ucommune International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ucommune International has no effect on the direction of Lion Financial i.e., Lion Financial and Ucommune International go up and down completely randomly.

Pair Corralation between Lion Financial and Ucommune International

Assuming the 90 days horizon Lion Financial is expected to generate 34.89 times less return on investment than Ucommune International. But when comparing it to its historical volatility, Lion Financial Group is 21.68 times less risky than Ucommune International. It trades about 0.09 of its potential returns per unit of risk. Ucommune International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.45  in Ucommune International on September 2, 2024 and sell it today you would lose (0.45) from holding Ucommune International or give up 31.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.25%
Values	Daily Returns

Lion Financial Group  vs.  Ucommune International

Lion Financial Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lion Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Lion Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Ucommune International

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Lion Financial and Ucommune International

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

The idea behind Lion Financial Group and Ucommune 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.