Correlation Between Lufax Holding and Enova International

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

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

Diversification Opportunities for Lufax Holding and Enova International

-0.18

Correlation Coefficient

Lufax Holding  Enova International

Good diversification

The 3 months correlation between Lufax and Enova is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lufax Holding and Enova International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enova International 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 Enova International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enova International has no effect on the direction of Lufax Holding i.e., Lufax Holding and Enova International go up and down completely randomly.

Pair Corralation between Lufax Holding and Enova International

Allowing for the 90-day total investment horizon Lufax Holding is expected to under-perform the Enova International. In addition to that, Lufax Holding is 1.37 times more volatile than Enova International. It trades about -0.03 of its total potential returns per unit of risk. Enova International is currently generating about 0.32 per unit of volatility. If you would invest  8,812  in Enova International on August 31, 2024 and sell it today you would earn a total of  1,742  from holding Enova International or generate 19.77% return on investment over 90 days.

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

Lufax Holding  vs.  Enova International

Lufax Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lufax Holding are ranked lower than 4 (%) 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.

Enova International

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enova International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Enova International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lufax Holding and Enova International

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

The idea behind Lufax Holding and Enova International 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.