Correlation Between Lufax Holding and Open Lending

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

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

Diversification Opportunities for Lufax Holding and Open Lending

-0.37

Correlation Coefficient

Lufax Holding  Open Lending

Very good diversification

The 3 months correlation between Lufax and Open is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lufax Holding and Open Lending Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Lending Corp 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 Open Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Lending Corp has no effect on the direction of Lufax Holding i.e., Lufax Holding and Open Lending go up and down completely randomly.

Pair Corralation between Lufax Holding and Open Lending

Allowing for the 90-day total investment horizon Lufax Holding is expected to generate 1.5 times more return on investment than Open Lending. However, Lufax Holding is 1.5 times more volatile than Open Lending Corp. It trades about 0.01 of its potential returns per unit of risk. Open Lending Corp is currently generating about 0.01 per unit of risk. If you would invest  327.00  in Lufax Holding on September 20, 2024 and sell it today you would lose (85.00) from holding Lufax Holding or give up 25.99% of portfolio value over 90 days.

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

Lufax Holding  vs.  Open Lending Corp

Lufax Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lufax Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Lufax Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Open Lending Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Open Lending Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Open Lending may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lufax Holding and Open Lending

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

The idea behind Lufax Holding and Open Lending Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.