Correlation Between Parts ID and Lightinthebox Holding

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

Diversification Opportunities for Parts ID and Lightinthebox Holding

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Parts and Lightinthebox is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Parts ID and Lightinthebox Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightinthebox Holding and Parts ID 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 Parts ID 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 Parts ID i.e., Parts ID and Lightinthebox Holding go up and down completely randomly.

Pair Corralation between Parts ID and Lightinthebox Holding

Allowing for the 90-day total investment horizon Parts ID is expected to under-perform the Lightinthebox Holding. But the stock apears to be less risky and, when comparing its historical volatility, Parts ID is 1.14 times less risky than Lightinthebox Holding. The stock trades about -0.05 of its potential returns per unit of risk. The Lightinthebox Holding Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  121.00  in Lightinthebox Holding Co on April 8, 2022 and sell it today you would lose (10.00)  from holding Lightinthebox Holding Co or give up 8.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.99%
ValuesDaily Returns

Parts ID  vs.  Lightinthebox Holding Co

 Performance (%) 
      Timeline 
Parts ID 
Parts Performance
0 of 100
Over the last 90 days Parts ID has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in August 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Parts 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 somewhat strong basic indicators, Lightinthebox Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lightinthebox Price Channel

Parts ID and Lightinthebox Holding Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Parts ID and Lightinthebox Holding

The main advantage of trading using opposite Parts ID and Lightinthebox Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parts ID 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 Parts ID 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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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