Correlation Between American Leisure and LiveChain
Can any of the company-specific risk be diversified away by investing in both American Leisure and LiveChain 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 American Leisure and LiveChain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Leisure Holdings and LiveChain, you can compare the effects of market volatilities on American Leisure and LiveChain 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 American Leisure with a short position of LiveChain. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Leisure and LiveChain.
Diversification Opportunities for American Leisure and LiveChain
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and LiveChain is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding American Leisure Holdings and LiveChain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveChain and American Leisure 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 American Leisure Holdings are associated (or correlated) with LiveChain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveChain has no effect on the direction of American Leisure i.e., American Leisure and LiveChain go up and down completely randomly.
Pair Corralation between American Leisure and LiveChain
Given the investment horizon of 90 days American Leisure Holdings is not expected to generate positive returns. Moreover, American Leisure is 6.11 times more volatile than LiveChain. It trades away all of its potential returns to assume current level of volatility. LiveChain is currently generating about 0.22 per unit of risk. If you would invest 0.46 in LiveChain on October 26, 2024 and sell it today you would earn a total of 0.10 from holding LiveChain or generate 21.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
American Leisure Holdings vs. LiveChain
Performance |
| Timeline |
| American Leisure Holdings |
| LiveChain |
American Leisure and LiveChain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Leisure and LiveChain
The main advantage of trading using opposite American Leisure and LiveChain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Leisure position performs unexpectedly, LiveChain 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 LiveChain will offset losses from the drop in LiveChain's long position.| American Leisure vs. Absolute Health and | American Leisure vs. Supurva Healthcare Group | American Leisure vs. China Health Management | American Leisure vs. Embrace Change Acquisition |
| LiveChain vs. American Leisure Holdings | LiveChain vs. Absolute Health and | LiveChain vs. Supurva Healthcare Group | LiveChain vs. China Health Management |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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