Correlation Between LifeSpeak and INX Digital
Can any of the company-specific risk be diversified away by investing in both LifeSpeak and INX Digital 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 LifeSpeak and INX Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LifeSpeak and The INX Digital, you can compare the effects of market volatilities on LifeSpeak and INX Digital 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 LifeSpeak with a short position of INX Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of LifeSpeak and INX Digital.
Diversification Opportunities for LifeSpeak and INX Digital
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between LifeSpeak and INX is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding LifeSpeak and The INX Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INX Digital and LifeSpeak 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 LifeSpeak are associated (or correlated) with INX Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INX Digital has no effect on the direction of LifeSpeak i.e., LifeSpeak and INX Digital go up and down completely randomly.
Pair Corralation between LifeSpeak and INX Digital
Assuming the 90 days horizon LifeSpeak is expected to under-perform the INX Digital. But the pink sheet apears to be less risky and, when comparing its historical volatility, LifeSpeak is 1.78 times less risky than INX Digital. The pink sheet trades about -0.21 of its potential returns per unit of risk. The The INX Digital is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5.30 in The INX Digital on August 28, 2024 and sell it today you would earn a total of 0.13 from holding The INX Digital or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LifeSpeak vs. The INX Digital
Performance |
| Timeline |
| LifeSpeak |
| INX Digital |
LifeSpeak and INX Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LifeSpeak and INX Digital
The main advantage of trading using opposite LifeSpeak and INX Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LifeSpeak position performs unexpectedly, INX Digital 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 INX Digital will offset losses from the drop in INX Digital's long position.The idea behind LifeSpeak and The INX Digital 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.| INX Digital vs. 01 Communique Laboratory | INX Digital vs. LifeSpeak | INX Digital vs. RESAAS Services | INX Digital vs. RenoWorks Software |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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