Correlation Between LiveChain and American Leisure
Can any of the company-specific risk be diversified away by investing in both LiveChain and American Leisure 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 LiveChain and American Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LiveChain and American Leisure Holdings, you can compare the effects of market volatilities on LiveChain and American Leisure 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 LiveChain with a short position of American Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiveChain and American Leisure.
Diversification Opportunities for LiveChain and American Leisure
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LiveChain and American is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding LiveChain and American Leisure Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Leisure Holdings and LiveChain 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 LiveChain are associated (or correlated) with American Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Leisure Holdings has no effect on the direction of LiveChain i.e., LiveChain and American Leisure go up and down completely randomly.
Pair Corralation between LiveChain and American Leisure
Given the investment horizon of 90 days LiveChain is expected to generate 1.85 times less return on investment than American Leisure. But when comparing it to its historical volatility, LiveChain is 1.18 times less risky than American Leisure. It trades about 0.09 of its potential returns per unit of risk. American Leisure Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.05 in American Leisure Holdings on September 3, 2024 and sell it today you would lose (0.04) from holding American Leisure Holdings or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LiveChain vs. American Leisure Holdings
Performance |
| Timeline |
| LiveChain |
| American Leisure Holdings |
LiveChain and American Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LiveChain and American Leisure
The main advantage of trading using opposite LiveChain and American Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiveChain position performs unexpectedly, American Leisure 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 American Leisure will offset losses from the drop in American Leisure's long position.| LiveChain vs. Manaris Corp | LiveChain vs. Green Planet Bio | LiveChain vs. Continental Beverage Brands | LiveChain vs. Opus Magnum Ameris |
| American Leisure vs. Manaris Corp | American Leisure vs. Green Planet Bio | American Leisure vs. Continental Beverage Brands | American Leisure vs. Opus Magnum Ameris |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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