Correlation Between Lexinfintech Holdings and DT Cloud

Can any of the company-specific risk be diversified away by investing in both Lexinfintech Holdings and DT Cloud 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 Lexinfintech Holdings and DT Cloud into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lexinfintech Holdings and DT Cloud Acquisition, you can compare the effects of market volatilities on Lexinfintech Holdings and DT Cloud 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 Lexinfintech Holdings with a short position of DT Cloud. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexinfintech Holdings and DT Cloud.

Diversification Opportunities for Lexinfintech Holdings and DT Cloud

0.8

Correlation Coefficient

Lexinfintech Holdings  DT Cloud

Very poor diversification

The 3 months correlation between Lexinfintech and DYCQ is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lexinfintech Holdings and DT Cloud Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DT Cloud Acquisition and Lexinfintech Holdings 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 Lexinfintech Holdings are associated (or correlated) with DT Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DT Cloud Acquisition has no effect on the direction of Lexinfintech Holdings i.e., Lexinfintech Holdings and DT Cloud go up and down completely randomly.

Pair Corralation between Lexinfintech Holdings and DT Cloud

Allowing for the 90-day total investment horizon Lexinfintech Holdings is expected to generate 56.4 times more return on investment than DT Cloud. However, Lexinfintech Holdings is 56.4 times more volatile than DT Cloud Acquisition. It trades about 0.17 of its potential returns per unit of risk. DT Cloud Acquisition is currently generating about 0.42 per unit of risk. If you would invest  604.00  in Lexinfintech Holdings on October 25, 2024 and sell it today you would earn a total of  64.00  from holding Lexinfintech Holdings or generate 10.6% return on investment over 90 days.

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

Lexinfintech Holdings  vs.  DT Cloud Acquisition

Lexinfintech Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lexinfintech Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Lexinfintech Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

DT Cloud Acquisition

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DT Cloud Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, DT Cloud is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Lexinfintech Holdings and DT Cloud

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

The idea behind Lexinfintech Holdings and DT Cloud 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.