Correlation Between Meridianlink and LeddarTech Holdings

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

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

Diversification Opportunities for Meridianlink and LeddarTech Holdings

0.17

Correlation Coefficient

Meridianlink  LeddarTech Holdings

Average diversification

The 3 months correlation between Meridianlink and LeddarTech is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Meridianlink and LeddarTech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeddarTech Holdings and Meridianlink 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 Meridianlink are associated (or correlated) with LeddarTech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeddarTech Holdings has no effect on the direction of Meridianlink i.e., Meridianlink and LeddarTech Holdings go up and down completely randomly.

Pair Corralation between Meridianlink and LeddarTech Holdings

Given the investment horizon of 90 days Meridianlink is expected to under-perform the LeddarTech Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Meridianlink is 24.1 times less risky than LeddarTech Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The LeddarTech Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  44.00  in LeddarTech Holdings on September 13, 2024 and sell it today you would earn a total of  137.00  from holding LeddarTech Holdings or generate 311.36% return on investment over 90 days.

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

Meridianlink  vs.  LeddarTech Holdings

Meridianlink

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meridianlink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Meridianlink is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

LeddarTech Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LeddarTech Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, LeddarTech Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meridianlink and LeddarTech Holdings

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

The idea behind Meridianlink and LeddarTech Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.