Correlation Between CRA International and LiveChat Software

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

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

Diversification Opportunities for CRA International and LiveChat Software

-0.67

Correlation Coefficient

CRA International  LiveChat Software

Excellent diversification

The 3 months correlation between CRA and LiveChat is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and LiveChat Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveChat Software and CRA International 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 CRA International are associated (or correlated) with LiveChat Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveChat Software has no effect on the direction of CRA International i.e., CRA International and LiveChat Software go up and down completely randomly.

Pair Corralation between CRA International and LiveChat Software

Given the investment horizon of 90 days CRA International is expected to generate 0.88 times more return on investment than LiveChat Software. However, CRA International is 1.14 times less risky than LiveChat Software. It trades about 0.05 of its potential returns per unit of risk. LiveChat Software SA is currently generating about 0.0 per unit of risk. If you would invest  11,906  in CRA International on September 26, 2024 and sell it today you would earn a total of  6,967  from holding CRA International or generate 58.52% return on investment over 90 days.

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

CRA International  vs.  LiveChat Software SA

CRA International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CRA International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CRA International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

LiveChat Software

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CRA International and LiveChat Software

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

The idea behind CRA International and LiveChat Software SA 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 Global Correlations module to find global opportunities by holding instruments from different markets.