Correlation Between United States and Livetech

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

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

Diversification Opportunities for United States and Livetech

-0.66

Correlation Coefficient

United States  Livetech

Excellent diversification

The 3 months correlation between United and Livetech is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Livetech da Bahia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livetech da Bahia and United States 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 United States Steel are associated (or correlated) with Livetech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livetech da Bahia has no effect on the direction of United States i.e., United States and Livetech go up and down completely randomly.

Pair Corralation between United States and Livetech

Assuming the 90 days trading horizon United States Steel is expected to generate 1.21 times more return on investment than Livetech. However, United States is 1.21 times more volatile than Livetech da Bahia. It trades about 0.11 of its potential returns per unit of risk. Livetech da Bahia is currently generating about -0.25 per unit of risk. If you would invest  19,345  in United States Steel on September 12, 2024 and sell it today you would earn a total of  3,323  from holding United States Steel or generate 17.18% return on investment over 90 days.

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

United States Steel  vs.  Livetech da Bahia

United States Steel

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, United States sustained solid returns over the last few months and may actually be approaching a breakup point.

Livetech da Bahia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Livetech da Bahia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with United States and Livetech

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

The idea behind United States Steel and Livetech da Bahia 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.