Correlation Between Supercom and Lifevantage

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

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

Diversification Opportunities for Supercom and Lifevantage

-0.13

Correlation Coefficient

Supercom  Lifevantage

Good diversification

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

Pair Corralation between Supercom and Lifevantage

Given the investment horizon of 90 days Supercom is expected to generate 4.73 times less return on investment than Lifevantage. In addition to that, Supercom is 1.17 times more volatile than Lifevantage. It trades about 0.03 of its total potential returns per unit of risk. Lifevantage is currently generating about 0.17 per unit of volatility. 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

Supercom  vs.  Lifevantage

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.

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.

Pair Trading with Supercom and Lifevantage

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

The idea behind Supercom and Lifevantage 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.