Correlation Between Everspin Technologies and Lizhi

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

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

Diversification Opportunities for Everspin Technologies and Lizhi

0.02

Correlation Coefficient

Everspin Technologies  Lizhi

Significant diversification

The 3 months correlation between Everspin and Lizhi is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Everspin Technologies and Lizhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhi Inc and Everspin Technologies 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 Everspin Technologies are associated (or correlated) with Lizhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lizhi Inc has no effect on the direction of Everspin Technologies i.e., Everspin Technologies and Lizhi go up and down completely randomly.

Pair Corralation between Everspin Technologies and Lizhi

Given the investment horizon of 90 days Everspin Technologies is expected to generate 1.24 times less return on investment than Lizhi. But when comparing it to its historical volatility, Everspin Technologies is 2.36 times less risky than Lizhi. It trades about 0.04 of its potential returns per unit of risk. Lizhi Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  215.00  in Lizhi Inc on October 9, 2024 and sell it today you would lose (6.00) from holding Lizhi Inc or give up 2.79% of portfolio value over 90 days.

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

Everspin Technologies  vs.  Lizhi Inc

Everspin Technologies

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Everspin Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Lizhi Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lizhi Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical and fundamental indicators, Lizhi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Everspin Technologies and Lizhi

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

The idea behind Everspin Technologies and Lizhi Inc 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.