Correlation Between Rich Sport and LH Financial

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

By analyzing existing cross correlation between Rich Sport Public and LH Financial Group, you can compare the effects of market volatilities on Rich Sport and LH Financial 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 Rich Sport with a short position of LH Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rich Sport and LH Financial.

Diversification Opportunities for Rich Sport and LH Financial

0.0

Correlation Coefficient

Rich Sport  LH Financial

Pay attention - limited upside

The 3 months correlation between Rich and LHFG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rich Sport Public and LH Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LH Financial Group and Rich Sport 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 Rich Sport Public are associated (or correlated) with LH Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LH Financial Group has no effect on the direction of Rich Sport i.e., Rich Sport and LH Financial go up and down completely randomly.

Pair Corralation between Rich Sport and LH Financial

Assuming the 90 days trading horizon Rich Sport Public is expected to generate 0.81 times more return on investment than LH Financial. However, Rich Sport Public is 1.24 times less risky than LH Financial. It trades about 0.06 of its potential returns per unit of risk. LH Financial Group is currently generating about -0.03 per unit of risk. If you would invest  192.00  in Rich Sport Public on September 5, 2024 and sell it today you would earn a total of  3.00  from holding Rich Sport Public or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Rich Sport Public  vs.  LH Financial Group

Rich Sport Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rich Sport Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Rich Sport is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

LH Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LH Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Rich Sport and LH Financial

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

The idea behind Rich Sport Public and LH Financial 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 Global Correlations module to find global opportunities by holding instruments from different markets.