Correlation Between Livetech and Lupatech
Can any of the company-specific risk be diversified away by investing in both Livetech and Lupatech 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 Livetech and Lupatech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Livetech da Bahia and Lupatech SA, you can compare the effects of market volatilities on Livetech and Lupatech 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 Livetech with a short position of Lupatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livetech and Lupatech.
Diversification Opportunities for Livetech and Lupatech
Modest diversification
The 3 months correlation between Livetech and Lupatech is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Livetech da Bahia and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA and Livetech 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 Livetech da Bahia are associated (or correlated) with Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Livetech i.e., Livetech and Lupatech go up and down completely randomly.
Pair Corralation between Livetech and Lupatech
Assuming the 90 days trading horizon Livetech da Bahia is expected to generate 0.91 times more return on investment than Lupatech. However, Livetech da Bahia is 1.09 times less risky than Lupatech. It trades about -0.02 of its potential returns per unit of risk. Lupatech SA is currently generating about -0.05 per unit of risk. If you would invest 380.00 in Livetech da Bahia on August 27, 2024 and sell it today you would lose (57.00) from holding Livetech da Bahia or give up 15.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Livetech da Bahia vs. Lupatech SA
Performance |
| Timeline |
| Livetech da Bahia |
| Lupatech SA |
Livetech and Lupatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Livetech and Lupatech
The main advantage of trading using opposite Livetech and Lupatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livetech position performs unexpectedly, Lupatech 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 Lupatech will offset losses from the drop in Lupatech's long position.| Livetech vs. METISA Metalrgica Timboense | Livetech vs. Paycom Software | Livetech vs. Automatic Data Processing | Livetech vs. Unity Software |
| Lupatech vs. Mitsubishi UFJ Financial | Lupatech vs. Sumitomo Mitsui Financial | Lupatech vs. Toyota Motor | Lupatech vs. Banco Santander Chile |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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