Correlation Between Lufax Holding and Launch One

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

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

Diversification Opportunities for Lufax Holding and Launch One

-0.42

Correlation Coefficient

Lufax Holding  Launch One

Very good diversification

The 3 months correlation between Lufax and Launch is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lufax Holding and Launch One Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Launch One 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 Launch One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Launch One Acquisition has no effect on the direction of Lufax Holding i.e., Lufax Holding and Launch One go up and down completely randomly.

Pair Corralation between Lufax Holding and Launch One

Allowing for the 90-day total investment horizon Lufax Holding is expected to generate 62.5 times more return on investment than Launch One. However, Lufax Holding is 62.5 times more volatile than Launch One Acquisition. It trades about 0.05 of its potential returns per unit of risk. Launch One Acquisition is currently generating about 0.12 per unit of risk. If you would invest  233.00  in Lufax Holding on September 25, 2024 and sell it today you would earn a total of  6.00  from holding Lufax Holding or generate 2.58% return on investment over 90 days.

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

Lufax Holding  vs.  Launch One Acquisition

Lufax Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lufax Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Lufax Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Launch One Acquisition

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Launch One Acquisition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Launch One is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lufax Holding and Launch One

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

The idea behind Lufax Holding and Launch One 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.