Correlation Between X Financial and Lewis Group

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

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

Diversification Opportunities for X Financial and Lewis Group

-0.74

Correlation Coefficient

X Financial  Lewis Group

Pay attention - limited upside

The 3 months correlation between XYF and Lewis is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding X Financial Class and Lewis Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lewis Group Limited and X Financial 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 X Financial Class are associated (or correlated) with Lewis Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lewis Group Limited has no effect on the direction of X Financial i.e., X Financial and Lewis Group go up and down completely randomly.

Pair Corralation between X Financial and Lewis Group

Considering the 90-day investment horizon X Financial Class is expected to generate 2.65 times more return on investment than Lewis Group. However, X Financial is 2.65 times more volatile than Lewis Group Limited. It trades about 0.19 of its potential returns per unit of risk. Lewis Group Limited is currently generating about -0.12 per unit of risk. If you would invest  813.00  in X Financial Class on December 21, 2024 and sell it today you would earn a total of  448.00  from holding X Financial Class or generate 55.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

X Financial Class  vs.  Lewis Group Limited

X Financial Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Lewis Group Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lewis Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with X Financial and Lewis Group

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

The idea behind X Financial Class and Lewis Group Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.