Correlation Between Lufax Holding and American Express
Can any of the company-specific risk be diversified away by investing in both Lufax Holding and American Express 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 Lufax Holding and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lufax Holding and American Express, you can compare the effects of market volatilities on Lufax Holding and American Express 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 Lufax Holding with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lufax Holding and American Express.
Diversification Opportunities for Lufax Holding and American Express
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lufax and American is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lufax Holding and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Lufax Holding 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 Lufax Holding are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Lufax Holding i.e., Lufax Holding and American Express go up and down completely randomly.
Pair Corralation between Lufax Holding and American Express
Allowing for the 90-day total investment horizon Lufax Holding is expected to generate 4.57 times more return on investment than American Express. However, Lufax Holding is 4.57 times more volatile than American Express. It trades about 0.16 of its potential returns per unit of risk. American Express is currently generating about 0.25 per unit of risk. If you would invest 246.00 in Lufax Holding on January 24, 2024 and sell it today you would earn a total of 193.00 from holding Lufax Holding or generate 78.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Lufax Holding vs. American Express
Performance |
Timeline |
Lufax Holding |
American Express |
Lufax Holding and American Express Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lufax Holding and American Express
The main advantage of trading using opposite Lufax Holding and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lufax Holding position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.Lufax Holding vs. Visa Class A | Lufax Holding vs. Mastercard | Lufax Holding vs. Oshidori International Holdings | Lufax Holding vs. US70082LAB36 |
American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. Oshidori International Holdings | American Express vs. US70082LAB36 |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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