Correlation Between Ucommune International and Lion Financial

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

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

Diversification Opportunities for Ucommune International and Lion Financial

-0.15

Correlation Coefficient

Ucommune International  Lion Financial

Good diversification

The 3 months correlation between Ucommune and Lion is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ucommune International and Lion Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Financial Group and Ucommune International 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 Ucommune International are associated (or correlated) with Lion Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Financial Group has no effect on the direction of Ucommune International i.e., Ucommune International and Lion Financial go up and down completely randomly.

Pair Corralation between Ucommune International and Lion Financial

Assuming the 90 days horizon Ucommune International is expected to generate 21.68 times more return on investment than Lion Financial. However, Ucommune International is 21.68 times more volatile than Lion Financial Group. It trades about 0.14 of its potential returns per unit of risk. Lion Financial Group is currently generating about 0.09 per unit of risk. If you would invest  1.45  in Ucommune International on September 2, 2024 and sell it today you would lose (0.45) from holding Ucommune International or give up 31.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.25%
Values	Daily Returns

Ucommune International  vs.  Lion Financial Group

Ucommune International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ucommune International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Ucommune International showed solid returns over the last few months and may actually be approaching a breakup point.

Lion Financial Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lion Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Lion Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ucommune International and Lion Financial

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

The idea behind Ucommune International and Lion 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.