Correlation Between Lightinthebox Holding and Mogu Inc

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Can any of the company-specific risk be diversified away by investing in both Lightinthebox Holding and Mogu Inc 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 Mogu Inc 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 Mogu Inc ADR, you can compare the effects of market volatilities on Lightinthebox Holding and Mogu Inc 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 Mogu Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lightinthebox Holding and Mogu Inc.

Diversification Opportunities for Lightinthebox Holding and Mogu Inc

0.57
  Correlation Coefficient

Very weak diversification

The 24 months correlation between Lightinthebox and Mogu Inc is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lightinthebox Holding Co and Mogu Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mogu Inc ADR 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 Mogu Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mogu Inc ADR has no effect on the direction of Lightinthebox Holding i.e., Lightinthebox Holding and Mogu Inc go up and down completely randomly.

Pair Corralation between Lightinthebox Holding and Mogu Inc

Given the investment horizon of 90 days Lightinthebox Holding Co is expected to generate 0.36 times more return on investment than Mogu Inc. However, Lightinthebox Holding Co is 2.78 times less risky than Mogu Inc. It trades about 0.16 of its potential returns per unit of risk. Mogu Inc ADR is currently generating about -0.07 per unit of risk. If you would invest  106.00  in Lightinthebox Holding Co on February 20, 2022 and sell it today you would earn a total of  11.00  from holding Lightinthebox Holding Co or generate 10.38% return on investment over 90 days.
Time Period24 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Lightinthebox Holding Co  vs.  Mogu Inc ADR

 Performance (%) 
      Timeline 
Lightinthebox Holding 
Lightinthebox Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Lightinthebox Holding Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Lightinthebox Holding sustained solid returns over the last few months and may actually be approaching a breakup point.

Lightinthebox Price Channel

Mogu Inc ADR 
Mogu Inc Performance
0 of 100
Over the last 90 days Mogu Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Mogu Inc Price Channel

Lightinthebox Holding and Mogu Inc Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Lightinthebox Holding and Mogu Inc

The main advantage of trading using opposite Lightinthebox Holding and Mogu Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lightinthebox Holding position performs unexpectedly, Mogu Inc 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 Mogu Inc will offset losses from the drop in Mogu Inc's long position.
The idea behind Lightinthebox Holding Co and Mogu Inc ADR 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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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