Correlation Between CNFinance Holdings and Loandepot

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

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

Diversification Opportunities for CNFinance Holdings and Loandepot

0.9

Correlation Coefficient

CNFinance Holdings  Loandepot

Almost no diversification

The 3 months correlation between CNFinance and Loandepot is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CNFinance Holdings and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot and CNFinance Holdings 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 CNFinance Holdings are associated (or correlated) with Loandepot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loandepot has no effect on the direction of CNFinance Holdings i.e., CNFinance Holdings and Loandepot go up and down completely randomly.

Pair Corralation between CNFinance Holdings and Loandepot

Considering the 90-day investment horizon CNFinance Holdings is expected to under-perform the Loandepot. In addition to that, CNFinance Holdings is 1.13 times more volatile than Loandepot. It trades about -0.11 of its total potential returns per unit of risk. Loandepot is currently generating about -0.1 per unit of volatility. If you would invest  162.00  in Loandepot on February 3, 2025 and sell it today you would lose (47.00) from holding Loandepot or give up 29.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

CNFinance Holdings  vs.  Loandepot

CNFinance Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNFinance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Loandepot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loandepot has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in June 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CNFinance Holdings and Loandepot

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

The idea behind CNFinance Holdings and Loandepot 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.