Correlation Between Algorand and Live Oak

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

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

Diversification Opportunities for Algorand and Live Oak

0.65

Correlation Coefficient

Algorand  Live Oak

Poor diversification

The 3 months correlation between Algorand and Live is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and Live Oak Crestview in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Oak Crestview and Algorand 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 Algorand are associated (or correlated) with Live Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Oak Crestview has no effect on the direction of Algorand i.e., Algorand and Live Oak go up and down completely randomly.

Pair Corralation between Algorand and Live Oak

Assuming the 90 days trading horizon Algorand is expected to generate 49.51 times more return on investment than Live Oak. However, Algorand is 49.51 times more volatile than Live Oak Crestview. It trades about 0.05 of its potential returns per unit of risk. Live Oak Crestview is currently generating about 0.15 per unit of risk. If you would invest  24.00  in Algorand on October 12, 2024 and sell it today you would earn a total of  10.00  from holding Algorand or generate 41.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	42.42%
Values	Daily Returns

Algorand  vs.  Live Oak Crestview

Algorand

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Algorand are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Algorand exhibited solid returns over the last few months and may actually be approaching a breakup point.

Live Oak Crestview

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Oak Crestview has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Live Oak is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Algorand and Live Oak

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

The idea behind Algorand and Live Oak Crestview 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.