Correlation Between Target and Levitee Labs

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

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

Diversification Opportunities for Target and Levitee Labs

0.0

Correlation Coefficient

Target  Levitee Labs

Pay attention - limited upside

The 3 months correlation between Target and Levitee is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Target Group and Levitee Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levitee Labs and Target 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 Target Group 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 Target i.e., Target and Levitee Labs go up and down completely randomly.

Pair Corralation between Target and Levitee Labs

If you would invest  0.22  in Target Group on September 13, 2024 and sell it today you would lose (0.08) from holding Target Group or give up 36.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Target Group  vs.  Levitee Labs

Target Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Target Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Target showed solid returns over the last few months and may actually be approaching a breakup point.

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 Target and Levitee Labs

The main advantage of trading using opposite Target and Levitee Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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 Target Group 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.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.