Correlation Between ADEIA P and LifeSpeak

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

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

Diversification Opportunities for ADEIA P and LifeSpeak

-0.23

Correlation Coefficient

ADEIA P  LifeSpeak

Very good diversification

The 3 months correlation between ADEIA and LifeSpeak is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ADEIA P and LifeSpeak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeSpeak and ADEIA P 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 ADEIA P are associated (or correlated) with LifeSpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeSpeak has no effect on the direction of ADEIA P i.e., ADEIA P and LifeSpeak go up and down completely randomly.

Pair Corralation between ADEIA P and LifeSpeak

Given the investment horizon of 90 days ADEIA P is expected to generate 0.42 times more return on investment than LifeSpeak. However, ADEIA P is 2.37 times less risky than LifeSpeak. It trades about 0.13 of its potential returns per unit of risk. LifeSpeak is currently generating about -0.07 per unit of risk. If you would invest  1,147  in ADEIA P on November 20, 2024 and sell it today you would earn a total of  181.00  from holding ADEIA P or generate 15.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

ADEIA P  vs.  LifeSpeak

ADEIA P

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADEIA P are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, ADEIA P sustained solid returns over the last few months and may actually be approaching a breakup point.

LifeSpeak

Risk-Adjusted Performance

Very Weak

Over the last 90 days LifeSpeak has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ADEIA P and LifeSpeak

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

The idea behind ADEIA P and LifeSpeak 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.