Correlation Between Perion Network and Lizhi

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

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

Diversification Opportunities for Perion Network and Lizhi

-0.62

Correlation Coefficient

Perion Network  Lizhi

Excellent diversification

The 3 months correlation between Perion and Lizhi is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Perion Network and Lizhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhi Inc and Perion Network 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 Perion Network 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 Perion Network i.e., Perion Network and Lizhi go up and down completely randomly.

Pair Corralation between Perion Network and Lizhi

Given the investment horizon of 90 days Perion Network is expected to generate 0.36 times more return on investment than Lizhi. However, Perion Network is 2.8 times less risky than Lizhi. It trades about 0.12 of its potential returns per unit of risk. Lizhi Inc is currently generating about 0.02 per unit of risk. If you would invest  778.00  in Perion Network on October 9, 2024 and sell it today you would earn a total of  113.00  from holding Perion Network or generate 14.52% return on investment over 90 days.

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

Perion Network  vs.  Lizhi Inc

Perion Network

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perion Network are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Perion Network demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 Perion Network and Lizhi

The main advantage of trading using opposite Perion Network and Lizhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perion Network 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 Perion Network 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.