Correlation Between Luxfer Holdings and Kandi Technologies

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

By analyzing existing cross correlation between Luxfer Holdings PLC and Kandi Technologies Group, you can compare the effects of market volatilities on Luxfer Holdings and Kandi Technologies 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 Luxfer Holdings with a short position of Kandi Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Kandi Technologies.

Diversification Opportunities for Luxfer Holdings and Kandi Technologies

-0.77

Correlation Coefficient

Luxfer Holdings  Kandi Technologies

Pay attention - limited upside

The 3 months correlation between Luxfer and Kandi is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Kandi Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kandi Technologies and Luxfer 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 Luxfer Holdings PLC are associated (or correlated) with Kandi Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kandi Technologies has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Kandi Technologies go up and down completely randomly.

Pair Corralation between Luxfer Holdings and Kandi Technologies

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 0.41 times more return on investment than Kandi Technologies. However, Luxfer Holdings PLC is 2.41 times less risky than Kandi Technologies. It trades about 0.01 of its potential returns per unit of risk. Kandi Technologies Group is currently generating about -0.03 per unit of risk. If you would invest  1,436  in Luxfer Holdings PLC on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Luxfer Holdings PLC or generate 0.0% return on investment over 90 days.

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

Luxfer Holdings PLC  vs.  Kandi Technologies Group

Luxfer Holdings PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Luxfer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Kandi Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kandi Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Luxfer Holdings and Kandi Technologies

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

The idea behind Luxfer Holdings PLC and Kandi Technologies Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.