Correlation Between Lendinvest PLC and China Pacific

Can any of the company-specific risk be diversified away by investing in both Lendinvest PLC and China Pacific 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 Lendinvest PLC and China Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lendinvest PLC and China Pacific Insurance, you can compare the effects of market volatilities on Lendinvest PLC and China Pacific 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 Lendinvest PLC with a short position of China Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendinvest PLC and China Pacific.

Diversification Opportunities for Lendinvest PLC and China Pacific

0.32

Correlation Coefficient

Lendinvest PLC  China Pacific

Weak diversification

The 3 months correlation between Lendinvest and China is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lendinvest PLC and China Pacific Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pacific Insurance and Lendinvest PLC 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 Lendinvest PLC are associated (or correlated) with China Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pacific Insurance has no effect on the direction of Lendinvest PLC i.e., Lendinvest PLC and China Pacific go up and down completely randomly.

Pair Corralation between Lendinvest PLC and China Pacific

Assuming the 90 days trading horizon Lendinvest PLC is expected to under-perform the China Pacific. In addition to that, Lendinvest PLC is 1.72 times more volatile than China Pacific Insurance. It trades about -0.07 of its total potential returns per unit of risk. China Pacific Insurance is currently generating about 0.04 per unit of volatility. If you would invest  1,389  in China Pacific Insurance on June 18, 2024 and sell it today you would earn a total of  511.00  from holding China Pacific Insurance or generate 36.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.19%
Values	Daily Returns

Lendinvest PLC  vs.  China Pacific Insurance

Lendinvest PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lendinvest PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lendinvest PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

China Pacific Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Pacific Insurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, China Pacific may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with Lendinvest PLC and China Pacific

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

The idea behind Lendinvest PLC and China Pacific Insurance 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.