Correlation Between Advanced Voice and LifeSpeak

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

By analyzing existing cross correlation between Advanced Voice Recognition and LifeSpeak, you can compare the effects of market volatilities on Advanced Voice and LifeSpeak 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 Advanced Voice with a short position of LifeSpeak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Voice and LifeSpeak.

Diversification Opportunities for Advanced Voice and LifeSpeak

-0.15

Correlation Coefficient

Advanced Voice  LifeSpeak

Good diversification

The 3 months correlation between Advanced and LifeSpeak is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Voice Recognition and LifeSpeak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeSpeak and Advanced Voice 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 Advanced Voice Recognition are associated (or correlated) with LifeSpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeSpeak has no effect on the direction of Advanced Voice i.e., Advanced Voice and LifeSpeak go up and down completely randomly.

Pair Corralation between Advanced Voice and LifeSpeak

Given the investment horizon of 90 days Advanced Voice Recognition is expected to generate 4.15 times more return on investment than LifeSpeak. However, Advanced Voice is 4.15 times more volatile than LifeSpeak. It trades about 0.05 of its potential returns per unit of risk. LifeSpeak is currently generating about -0.03 per unit of risk. If you would invest  49.00  in Advanced Voice Recognition on September 15, 2024 and sell it today you would lose (4.00) from holding Advanced Voice Recognition or give up 8.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	13.85%
Values	Daily Returns

Advanced Voice Recognition  vs.  LifeSpeak

Advanced Voice Recog

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Advanced Voice Recognition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak basic indicators, Advanced Voice demonstrated solid returns over the last few months and may actually be approaching a breakup point.

LifeSpeak

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LifeSpeak has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Advanced Voice and LifeSpeak

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

The idea behind Advanced Voice Recognition and LifeSpeak 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.