Correlation Between Lichen China and Eastman Kodak

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

By analyzing existing cross correlation between Lichen China Limited and Eastman Kodak Co, you can compare the effects of market volatilities on Lichen China and Eastman Kodak 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 Lichen China with a short position of Eastman Kodak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lichen China and Eastman Kodak.

Diversification Opportunities for Lichen China and Eastman Kodak

-0.52

Correlation Coefficient

Lichen China  Eastman Kodak

Excellent diversification

The 3 months correlation between Lichen and Eastman is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lichen China Limited and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak and Lichen China 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 Lichen China Limited are associated (or correlated) with Eastman Kodak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Kodak has no effect on the direction of Lichen China i.e., Lichen China and Eastman Kodak go up and down completely randomly.

Pair Corralation between Lichen China and Eastman Kodak

Given the investment horizon of 90 days Lichen China Limited is expected to under-perform the Eastman Kodak. In addition to that, Lichen China is 3.67 times more volatile than Eastman Kodak Co. It trades about -0.28 of its total potential returns per unit of risk. Eastman Kodak Co is currently generating about 0.01 per unit of volatility. If you would invest  725.00  in Eastman Kodak Co on November 29, 2024 and sell it today you would lose (10.00) from holding Eastman Kodak Co or give up 1.38% of portfolio value over 90 days.

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

Lichen China Limited  vs.  Eastman Kodak Co

Lichen China Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lichen China Limited 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 fundamental indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Eastman Kodak

Risk-Adjusted Performance

Weak

Over the last 90 days Eastman Kodak Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Eastman Kodak is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Lichen China and Eastman Kodak

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

The idea behind Lichen China Limited and Eastman Kodak Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..