Correlation Between Lufax Holding and Ares Acquisition

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

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

Diversification Opportunities for Lufax Holding and Ares Acquisition

-0.72

Correlation Coefficient

Lufax Holding  Ares Acquisition

Pay attention - limited upside

The 3 months correlation between Lufax and Ares is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lufax Holding and Ares Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Acquisition and Lufax Holding 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 Lufax Holding are associated (or correlated) with Ares Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Acquisition has no effect on the direction of Lufax Holding i.e., Lufax Holding and Ares Acquisition go up and down completely randomly.

Pair Corralation between Lufax Holding and Ares Acquisition

Allowing for the 90-day total investment horizon Lufax Holding is expected to generate 40.49 times more return on investment than Ares Acquisition. However, Lufax Holding is 40.49 times more volatile than Ares Acquisition. It trades about 0.02 of its potential returns per unit of risk. Ares Acquisition is currently generating about 0.16 per unit of risk. If you would invest  280.00  in Lufax Holding on October 3, 2024 and sell it today you would lose (40.00) from holding Lufax Holding or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.49%
Values	Daily Returns

Lufax Holding  vs.  Ares Acquisition

Lufax Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lufax Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ares Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ares Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lufax Holding and Ares Acquisition

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

The idea behind Lufax Holding and Ares Acquisition 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.