Correlation Between Investcorp Europe and LIV Capital
Can any of the company-specific risk be diversified away by investing in both Investcorp Europe 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 Investcorp Europe and LIV Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investcorp Europe Acquisition and LIV Capital Acquisition, you can compare the effects of market volatilities on Investcorp Europe 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 Investcorp Europe with a short position of LIV Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investcorp Europe and LIV Capital.
Diversification Opportunities for Investcorp Europe and LIV Capital
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investcorp and LIV is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Investcorp Europe Acquisition 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 Investcorp Europe 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 Investcorp Europe 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 Investcorp Europe i.e., Investcorp Europe and LIV Capital go up and down completely randomly.
Pair Corralation between Investcorp Europe and LIV Capital
If you would invest 1.74 in Investcorp Europe Acquisition on September 1, 2024 and sell it today you would lose (0.46) from holding Investcorp Europe Acquisition or give up 26.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 11.11% |
| Values | Daily Returns |
Investcorp Europe Acquisition vs. LIV Capital Acquisition
Performance |
| Timeline |
| Investcorp Europe |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| LIV Capital Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Investcorp Europe and LIV Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investcorp Europe and LIV Capital
The main advantage of trading using opposite Investcorp Europe and LIV Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investcorp Europe 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 Investcorp Europe 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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