Correlation Between Lichen China and Spire Global

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Can any of the company-specific risk be diversified away by investing in both Lichen China and Spire Global 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 Spire Global 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 Spire Global, you can compare the effects of market volatilities on Lichen China and Spire Global 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 Spire Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lichen China and Spire Global.

Diversification Opportunities for Lichen China and Spire Global

LichenSpireDiversified AwayLichenSpireDiversified Away100%
-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between Lichen and Spire is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lichen China Limited and Spire Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Global 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 Spire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Global has no effect on the direction of Lichen China i.e., Lichen China and Spire Global go up and down completely randomly.

Pair Corralation between Lichen China and Spire Global

Given the investment horizon of 90 days Lichen China Limited is expected to under-perform the Spire Global. In addition to that, Lichen China is 1.67 times more volatile than Spire Global. It trades about -0.26 of its total potential returns per unit of risk. Spire Global is currently generating about -0.03 per unit of volatility. If you would invest  1,662  in Spire Global on November 25, 2024 and sell it today you would lose (568.00) from holding Spire Global or give up 34.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lichen China Limited  vs.  Spire Global

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -100-50050
JavaScript chart by amCharts 3.21.15LICN SPIR
       Timeline  
Lichen China Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.250.511.52
Spire Global 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Spire Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb10121416182022

Lichen China and Spire Global Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-23.78-17.81-11.84-5.87-0.07844.559.2513.9518.6523.35 0.0030.0040.0050.006
JavaScript chart by amCharts 3.21.15LICN SPIR
       Returns  

Pair Trading with Lichen China and Spire Global

The main advantage of trading using opposite Lichen China and Spire Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lichen China position performs unexpectedly, Spire Global 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 Spire Global will offset losses from the drop in Spire Global's long position.
The idea behind Lichen China Limited and Spire Global 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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