Correlation Between Landsea Homes and Ucommune International

Can any of the company-specific risk be diversified away by investing in both Landsea Homes and Ucommune International 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 Landsea Homes and Ucommune International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Landsea Homes and Ucommune International, you can compare the effects of market volatilities on Landsea Homes and Ucommune International 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 Landsea Homes with a short position of Ucommune International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Landsea Homes and Ucommune International.

Diversification Opportunities for Landsea Homes and Ucommune International

-0.1

Correlation Coefficient

Landsea Homes  Ucommune International

Good diversification

The 3 months correlation between Landsea and Ucommune is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Landsea Homes and Ucommune International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ucommune International and Landsea Homes 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 Landsea Homes are associated (or correlated) with Ucommune International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ucommune International has no effect on the direction of Landsea Homes i.e., Landsea Homes and Ucommune International go up and down completely randomly.

Pair Corralation between Landsea Homes and Ucommune International

Assuming the 90 days horizon Landsea Homes is expected to under-perform the Ucommune International. But the stock apears to be less risky and, when comparing its historical volatility, Landsea Homes is 17.26 times less risky than Ucommune International. The stock trades about -0.01 of its potential returns per unit of risk. The Ucommune International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.45  in Ucommune International on August 31, 2024 and sell it today you would lose (0.45) from holding Ucommune International or give up 31.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.25%
Values	Daily Returns

Landsea Homes  vs.  Ucommune International

Landsea Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Landsea Homes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Landsea Homes is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ucommune International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ucommune International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Ucommune International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Landsea Homes and Ucommune International

The main advantage of trading using opposite Landsea Homes and Ucommune International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Landsea Homes position performs unexpectedly, Ucommune International 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 Ucommune International will offset losses from the drop in Ucommune International's long position.

The idea behind Landsea Homes and Ucommune International 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.