Correlation Between Paramount Global and LiveOne

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

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

Diversification Opportunities for Paramount Global and LiveOne

0.38

Correlation Coefficient

Paramount Global  LiveOne

Weak diversification

The 3 months correlation between Paramount and LiveOne is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global Class and LiveOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveOne and Paramount Global 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 Paramount Global Class are associated (or correlated) with LiveOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveOne has no effect on the direction of Paramount Global i.e., Paramount Global and LiveOne go up and down completely randomly.

Pair Corralation between Paramount Global and LiveOne

Given the investment horizon of 90 days Paramount Global Class is expected to under-perform the LiveOne. But the stock apears to be less risky and, when comparing its historical volatility, Paramount Global Class is 3.02 times less risky than LiveOne. The stock trades about -0.1 of its potential returns per unit of risk. The LiveOne is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  100.00  in LiveOne on September 29, 2024 and sell it today you would earn a total of  19.00  from holding LiveOne or generate 19.0% return on investment over 90 days.

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

Paramount Global Class  vs.  LiveOne

Paramount Global Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paramount Global Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Paramount Global is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

LiveOne

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LiveOne are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, LiveOne displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paramount Global and LiveOne

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

The idea behind Paramount Global Class and LiveOne 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.