Correlation Between Innovative International and LIV Capital
Can any of the company-specific risk be diversified away by investing in both Innovative International and LIV Capital 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 Innovative International and LIV Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative International Acquisition and LIV Capital Acquisition, you can compare the effects of market volatilities on Innovative International and LIV Capital 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 Innovative International with a short position of LIV Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative International and LIV Capital.
Diversification Opportunities for Innovative International and LIV Capital
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innovative and LIV is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Innovative International Acqui and LIV Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIV Capital Acquisition and Innovative International 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 Innovative International Acquisition are associated (or correlated) with LIV Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIV Capital Acquisition has no effect on the direction of Innovative International i.e., Innovative International and LIV Capital go up and down completely randomly.
Pair Corralation between Innovative International and LIV Capital
If you would invest 2.86 in LIV Capital Acquisition on August 30, 2024 and sell it today you would earn a total of 0.00 from holding LIV Capital Acquisition or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative International Acqui vs. LIV Capital Acquisition
Performance |
| Timeline |
| Innovative International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| LIV Capital Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Innovative International and LIV Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative International and LIV Capital
The main advantage of trading using opposite Innovative International and LIV Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative International position performs unexpectedly, LIV Capital 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 LIV Capital will offset losses from the drop in LIV Capital's long position.The idea behind Innovative International Acquisition and LIV Capital Acquisition 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 the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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