Correlation Between Amexdrug and Levitee Labs

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

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

Diversification Opportunities for Amexdrug and Levitee Labs

1.0

Correlation Coefficient

Amexdrug  Levitee Labs

No risk reduction

The 3 months correlation between Amexdrug and Levitee is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Amexdrug and Levitee Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levitee Labs and Amexdrug 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 Amexdrug are associated (or correlated) with Levitee Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levitee Labs has no effect on the direction of Amexdrug i.e., Amexdrug and Levitee Labs go up and down completely randomly.

Pair Corralation between Amexdrug and Levitee Labs

If you would invest  0.27  in Levitee Labs on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Levitee Labs or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Amexdrug  vs.  Levitee Labs

Amexdrug

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amexdrug has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amexdrug is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Levitee Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Levitee Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Levitee Labs is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Amexdrug and Levitee Labs

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

The idea behind Amexdrug and Levitee Labs 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.