Correlation Between Lufax Holding and Eason Technology

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

By analyzing existing cross correlation between Lufax Holding and Eason Technology Limited, you can compare the effects of market volatilities on Lufax Holding and Eason Technology 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 Eason Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lufax Holding and Eason Technology.

Diversification Opportunities for Lufax Holding and Eason Technology

-0.29

Correlation Coefficient

Lufax Holding  Eason Technology

Very good diversification

The 3 months correlation between Lufax and Eason is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lufax Holding and Eason Technology Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eason Technology 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 Eason Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eason Technology has no effect on the direction of Lufax Holding i.e., Lufax Holding and Eason Technology go up and down completely randomly.

Pair Corralation between Lufax Holding and Eason Technology

Allowing for the 90-day total investment horizon Lufax Holding is expected to generate 1.47 times less return on investment than Eason Technology. But when comparing it to its historical volatility, Lufax Holding is 8.21 times less risky than Eason Technology. It trades about 0.12 of its potential returns per unit of risk. Eason Technology Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,900  in Eason Technology Limited on December 27, 2024 and sell it today you would lose (2,192) from holding Eason Technology Limited or give up 75.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.49%
Values	Daily Returns

Lufax Holding  vs.  Eason Technology Limited

Lufax Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lufax Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Lufax Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Eason Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eason Technology Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Eason Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lufax Holding and Eason Technology

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

The idea behind Lufax Holding and Eason Technology Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.