Correlation Between LICOGI 13 and Travel Investment

Can any of the company-specific risk be diversified away by investing in both LICOGI 13 and Travel Investment 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 LICOGI 13 and Travel Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LICOGI 13 and Travel Investment and, you can compare the effects of market volatilities on LICOGI 13 and Travel Investment 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 LICOGI 13 with a short position of Travel Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LICOGI 13 and Travel Investment.

Diversification Opportunities for LICOGI 13 and Travel Investment

0.69

Correlation Coefficient

LICOGI 13  Travel Investment

Poor diversification

The 3 months correlation between LICOGI and Travel is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LICOGI 13 and Travel Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travel Investment and LICOGI 13 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 LICOGI 13 are associated (or correlated) with Travel Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travel Investment has no effect on the direction of LICOGI 13 i.e., LICOGI 13 and Travel Investment go up and down completely randomly.

Pair Corralation between LICOGI 13 and Travel Investment

Assuming the 90 days trading horizon LICOGI 13 is expected to under-perform the Travel Investment. In addition to that, LICOGI 13 is 1.29 times more volatile than Travel Investment and. It trades about -0.06 of its total potential returns per unit of risk. Travel Investment and is currently generating about -0.07 per unit of volatility. If you would invest  900,000  in Travel Investment and on September 29, 2024 and sell it today you would lose (131,000) from holding Travel Investment and or give up 14.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	75.78%
Values	Daily Returns

LICOGI 13  vs.  Travel Investment and

LICOGI 13

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LICOGI 13 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, LICOGI 13 is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Travel Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Travel Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Travel Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LICOGI 13 and Travel Investment

The main advantage of trading using opposite LICOGI 13 and Travel Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LICOGI 13 position performs unexpectedly, Travel Investment 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 Travel Investment will offset losses from the drop in Travel Investment's long position.

The idea behind LICOGI 13 and Travel Investment and 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.