Correlation Between Victorias Secret and Li Bang

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

By analyzing existing cross correlation between Victorias Secret Co and Li Bang International, you can compare the effects of market volatilities on Victorias Secret and Li Bang 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 Victorias Secret with a short position of Li Bang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victorias Secret and Li Bang.

Diversification Opportunities for Victorias Secret and Li Bang

-0.05

Correlation Coefficient

Victorias Secret  Li Bang

Good diversification

The 3 months correlation between Victorias and LBGJ is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Li Bang International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Bang International and Victorias Secret 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 Victorias Secret Co are associated (or correlated) with Li Bang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Bang International has no effect on the direction of Victorias Secret i.e., Victorias Secret and Li Bang go up and down completely randomly.

Pair Corralation between Victorias Secret and Li Bang

Given the investment horizon of 90 days Victorias Secret Co is expected to generate 0.45 times more return on investment than Li Bang. However, Victorias Secret Co is 2.21 times less risky than Li Bang. It trades about 0.01 of its potential returns per unit of risk. Li Bang International is currently generating about -0.02 per unit of risk. If you would invest  4,619  in Victorias Secret Co on October 24, 2024 and sell it today you would lose (705.00) from holding Victorias Secret Co or give up 15.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	12.35%
Values	Daily Returns

Victorias Secret Co  vs.  Li Bang International

Victorias Secret

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Victorias Secret displayed solid returns over the last few months and may actually be approaching a breakup point.

Li Bang International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Li Bang International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively steady which may send shares a bit higher in February 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Pair Trading with Victorias Secret and Li Bang

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

The idea behind Victorias Secret Co and Li Bang International 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..