Correlation Between Lightinthebox Holding and EBay

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

Diversification Opportunities for Lightinthebox Holding and EBay

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Lightinthebox and EBay is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lightinthebox Holding Co and EBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBay Inc and Lightinthebox 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 Lightinthebox Holding Co are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBay Inc has no effect on the direction of Lightinthebox Holding i.e., Lightinthebox Holding and EBay go up and down completely randomly.

Pair Corralation between Lightinthebox Holding and EBay

Given the investment horizon of 90 days Lightinthebox Holding Co is expected to generate 3.03 times more return on investment than EBay. However, Lightinthebox Holding is 3.03 times more volatile than EBay Inc. It trades about 0.04 of its potential returns per unit of risk. EBay Inc is currently generating about 0.01 per unit of risk. If you would invest  79.00  in Lightinthebox Holding Co on February 22, 2022 and sell it today you would earn a total of  38.00  from holding Lightinthebox Holding Co or generate 48.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lightinthebox Holding Co  vs.  EBay Inc

 Performance (%) 
      Timeline 
Lightinthebox Holding 
Lightinthebox Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Lightinthebox Holding Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Lightinthebox Holding may actually be approaching a critical reversion point that can send shares even higher in June 2022.

Lightinthebox Price Channel

EBay Inc 
EBay Performance
0 of 100
Over the last 90 days EBay Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

EBay Price Channel

Lightinthebox Holding and EBay Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Lightinthebox Holding and EBay

The main advantage of trading using opposite Lightinthebox Holding and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lightinthebox Holding position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.
The idea behind Lightinthebox Holding Co and EBay Inc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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