Correlation Between Livermore Investments and Futura Medical

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

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

Diversification Opportunities for Livermore Investments and Futura Medical

-0.19

Correlation Coefficient

Livermore Investments  Futura Medical

Good diversification

The 3 months correlation between Livermore and Futura is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments Group and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical and Livermore Investments 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 Livermore Investments Group are associated (or correlated) with Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Livermore Investments i.e., Livermore Investments and Futura Medical go up and down completely randomly.

Pair Corralation between Livermore Investments and Futura Medical

Assuming the 90 days trading horizon Livermore Investments Group is expected to generate 0.54 times more return on investment than Futura Medical. However, Livermore Investments Group is 1.86 times less risky than Futura Medical. It trades about 0.28 of its potential returns per unit of risk. Futura Medical is currently generating about -0.05 per unit of risk. If you would invest  3,553  in Livermore Investments Group on September 13, 2024 and sell it today you would earn a total of  997.00  from holding Livermore Investments Group or generate 28.06% return on investment over 90 days.

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

Livermore Investments Group  vs.  Futura Medical

Livermore Investments

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Livermore Investments Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Livermore Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Futura Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Futura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Livermore Investments and Futura Medical

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

The idea behind Livermore Investments Group and Futura Medical 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.