Correlation Between AH Vest and Lighthouse Capital

Can any of the company-specific risk be diversified away by investing in both AH Vest and Lighthouse 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 AH Vest and Lighthouse Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AH Vest Limited and Lighthouse Capital, you can compare the effects of market volatilities on AH Vest and Lighthouse 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 AH Vest with a short position of Lighthouse Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of AH Vest and Lighthouse Capital.

Diversification Opportunities for AH Vest and Lighthouse Capital

-0.78

Correlation Coefficient

AH Vest  Lighthouse Capital

Pay attention - limited upside

The 3 months correlation between AHL and Lighthouse is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding AH Vest Limited and Lighthouse Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lighthouse Capital and AH Vest 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 AH Vest Limited are associated (or correlated) with Lighthouse Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lighthouse Capital has no effect on the direction of AH Vest i.e., AH Vest and Lighthouse Capital go up and down completely randomly.

Pair Corralation between AH Vest and Lighthouse Capital

Assuming the 90 days trading horizon AH Vest Limited is expected to generate 5.16 times more return on investment than Lighthouse Capital. However, AH Vest is 5.16 times more volatile than Lighthouse Capital. It trades about 0.13 of its potential returns per unit of risk. Lighthouse Capital is currently generating about -0.01 per unit of risk. If you would invest  1,000.00  in AH Vest Limited on September 4, 2024 and sell it today you would earn a total of  300.00  from holding AH Vest Limited or generate 30.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

AH Vest Limited  vs.  Lighthouse Capital

AH Vest Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AH Vest Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, AH Vest exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lighthouse Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lighthouse Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Lighthouse Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AH Vest and Lighthouse Capital

The main advantage of trading using opposite AH Vest and Lighthouse Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AH Vest position performs unexpectedly, Lighthouse 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 Lighthouse Capital will offset losses from the drop in Lighthouse Capital's long position.

The idea behind AH Vest Limited and Lighthouse Capital 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.