Correlation Between Lifevantage and Supercom

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

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

Diversification Opportunities for Lifevantage and Supercom

-0.13

Correlation Coefficient

Lifevantage  Supercom

Good diversification

The 3 months correlation between Lifevantage and Supercom is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Supercom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercom and Lifevantage 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 Lifevantage are associated (or correlated) with Supercom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercom has no effect on the direction of Lifevantage i.e., Lifevantage and Supercom go up and down completely randomly.

Pair Corralation between Lifevantage and Supercom

Given the investment horizon of 90 days Lifevantage is expected to generate 0.85 times more return on investment than Supercom. However, Lifevantage is 1.17 times less risky than Supercom. It trades about 0.17 of its potential returns per unit of risk. Supercom is currently generating about 0.03 per unit of risk. If you would invest  1,205  in Lifevantage on September 30, 2024 and sell it today you would earn a total of  580.00  from holding Lifevantage or generate 48.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lifevantage  vs.  Supercom

Lifevantage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lifevantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Supercom

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Supercom are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Supercom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lifevantage and Supercom

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

The idea behind Lifevantage and Supercom 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.