Correlation Between Lufax Holding and Thunder Bridge

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

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

Diversification Opportunities for Lufax Holding and Thunder Bridge

-0.32

Correlation Coefficient

Lufax Holding  Thunder Bridge

Very good diversification

The 3 months correlation between Lufax and Thunder is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lufax Holding and Thunder Bridge Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Bridge Capital 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 Thunder Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Bridge Capital has no effect on the direction of Lufax Holding i.e., Lufax Holding and Thunder Bridge go up and down completely randomly.

Pair Corralation between Lufax Holding and Thunder Bridge

Allowing for the 90-day total investment horizon Lufax Holding is expected to generate 1.03 times less return on investment than Thunder Bridge. In addition to that, Lufax Holding is 5.74 times more volatile than Thunder Bridge Capital. It trades about 0.01 of its total potential returns per unit of risk. Thunder Bridge Capital is currently generating about 0.05 per unit of volatility. If you would invest  998.00  in Thunder Bridge Capital on September 26, 2024 and sell it today you would earn a total of  226.00  from holding Thunder Bridge Capital or generate 22.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.98%
Values	Daily Returns

Lufax Holding  vs.  Thunder Bridge Capital

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 latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Thunder Bridge Capital

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Thunder Bridge Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively uncertain fundamental indicators, Thunder Bridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lufax Holding and Thunder Bridge

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

The idea behind Lufax Holding and Thunder Bridge Capital 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.