Correlation Between International Business and Lightinthebox Holding

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

Diversification Opportunities for International Business and Lightinthebox Holding

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between International and Lightinthebox is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Lightinthebox Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightinthebox Holding and International Business 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 International Business Machines are associated (or correlated) with Lightinthebox Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lightinthebox Holding has no effect on the direction of International Business i.e., International Business and Lightinthebox Holding go up and down completely randomly.

Pair Corralation between International Business and Lightinthebox Holding

Considering the 90-day investment horizon International Business Machines is expected to generate 0.66 times more return on investment than Lightinthebox Holding. However, International Business Machines is 1.52 times less risky than Lightinthebox Holding. It trades about -0.03 of its potential returns per unit of risk. Lightinthebox Holding Co is currently generating about -0.19 per unit of risk. If you would invest  13,641  in International Business Machines on May 18, 2022 and sell it today you would lose (148.00)  from holding International Business Machines or give up 1.08% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

International Business Machine  vs.  Lightinthebox Holding Co

 Performance (%) 
       Timeline  
International Business 
International Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady fundamental drivers, International Business is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

International Price Channel

Lightinthebox Holding 
Lightinthebox Performance
0 of 100
Over the last 90 days Lightinthebox Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lightinthebox Price Channel

International Business and Lightinthebox Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with International Business and Lightinthebox Holding

The main advantage of trading using opposite International Business and Lightinthebox Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Lightinthebox Holding 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 Lightinthebox Holding will offset losses from the drop in Lightinthebox Holding's long position.
The idea behind International Business Machines and Lightinthebox Holding Co 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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