Correlation Between Lexinfintech Holdings and Mastercard

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Can any of the company-specific risk be diversified away by investing in both Lexinfintech Holdings and Mastercard 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 Lexinfintech Holdings and Mastercard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lexinfintech Holdings and Mastercard, you can compare the effects of market volatilities on Lexinfintech Holdings and Mastercard 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 Lexinfintech Holdings with a short position of Mastercard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexinfintech Holdings and Mastercard.

Diversification Opportunities for Lexinfintech Holdings and Mastercard

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Lexinfintech and Mastercard is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lexinfintech Holdings and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard and Lexinfintech Holdings 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 Lexinfintech Holdings are associated (or correlated) with Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of Lexinfintech Holdings i.e., Lexinfintech Holdings and Mastercard go up and down completely randomly.

Pair Corralation between Lexinfintech Holdings and Mastercard

Allowing for the 90-day total investment horizon Lexinfintech Holdings is expected to generate 2.27 times less return on investment than Mastercard. In addition to that, Lexinfintech Holdings is 5.15 times more volatile than Mastercard. It trades about 0.0 of its total potential returns per unit of risk. Mastercard is currently generating about 0.04 per unit of volatility. If you would invest  47,475  in Mastercard on December 29, 2023 and sell it today you would earn a total of  320.00  from holding Mastercard or generate 0.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Lexinfintech Holdings  vs.  Mastercard

 Performance 
       Timeline  
Lexinfintech Holdings 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Lexinfintech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lexinfintech Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Mastercard 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Mastercard sustained solid returns over the last few months and may actually be approaching a breakup point.

Lexinfintech Holdings and Mastercard Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lexinfintech Holdings and Mastercard

The main advantage of trading using opposite Lexinfintech Holdings and Mastercard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexinfintech Holdings position performs unexpectedly, Mastercard 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 Mastercard will offset losses from the drop in Mastercard's long position.
The idea behind Lexinfintech Holdings and Mastercard 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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