Correlation Between Lizhi and EverQuote

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

By analyzing existing cross correlation between Lizhi Inc and EverQuote Class A, you can compare the effects of market volatilities on Lizhi and EverQuote 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 Lizhi with a short position of EverQuote. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lizhi and EverQuote.

Diversification Opportunities for Lizhi and EverQuote

0.0

Correlation Coefficient

Lizhi  EverQuote

Pay attention - limited upside

The 3 months correlation between Lizhi and EverQuote is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lizhi Inc and EverQuote Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EverQuote Class A and Lizhi 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 Lizhi Inc are associated (or correlated) with EverQuote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EverQuote Class A has no effect on the direction of Lizhi i.e., Lizhi and EverQuote go up and down completely randomly.

Pair Corralation between Lizhi and EverQuote

If you would invest  1,969  in EverQuote Class A on December 29, 2024 and sell it today you would earn a total of  840.00  from holding EverQuote Class A or generate 42.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lizhi Inc  vs.  EverQuote Class A

Lizhi Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lizhi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Lizhi is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

EverQuote Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EverQuote Class A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, EverQuote reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lizhi and EverQuote

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

The idea behind Lizhi Inc and EverQuote Class A 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.