Correlation Between LM Funding and CNFinance Holdings
Can any of the company-specific risk be diversified away by investing in both LM Funding and CNFinance Holdings 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 LM Funding and CNFinance Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LM Funding America and CNFinance Holdings, you can compare the effects of market volatilities on LM Funding and CNFinance Holdings 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 LM Funding with a short position of CNFinance Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LM Funding and CNFinance Holdings.
Diversification Opportunities for LM Funding and CNFinance Holdings
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LMFA and CNFinance is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding LM Funding America and CNFinance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNFinance Holdings and LM Funding 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 LM Funding America are associated (or correlated) with CNFinance Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNFinance Holdings has no effect on the direction of LM Funding i.e., LM Funding and CNFinance Holdings go up and down completely randomly.
Pair Corralation between LM Funding and CNFinance Holdings
Given the investment horizon of 90 days LM Funding America is expected to under-perform the CNFinance Holdings. But the stock apears to be less risky and, when comparing its historical volatility, LM Funding America is 2.03 times less risky than CNFinance Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The CNFinance Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 300.00 in CNFinance Holdings on September 3, 2025 and sell it today you would earn a total of 297.00 from holding CNFinance Holdings or generate 99.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LM Funding America vs. CNFinance Holdings
Performance |
| Timeline |
| LM Funding America |
| CNFinance Holdings |
LM Funding and CNFinance Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LM Funding and CNFinance Holdings
The main advantage of trading using opposite LM Funding and CNFinance Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LM Funding position performs unexpectedly, CNFinance Holdings 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 CNFinance Holdings will offset losses from the drop in CNFinance Holdings' long position.| LM Funding vs. Elmos Semiconductor SE | LM Funding vs. Quantum Medical Transport | LM Funding vs. Road King Infrastructure | LM Funding vs. Marten Transport |
| CNFinance Holdings vs. Nissan Chemical | CNFinance Holdings vs. Silicon Motion Technology | CNFinance Holdings vs. SBM Offshore NV | CNFinance Holdings vs. KNOT Offshore Partners |
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 the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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