Correlation Between Immobile and Live Motion

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

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

Diversification Opportunities for Immobile and Live Motion

0.12

Correlation Coefficient

Immobile  Live Motion

Average diversification

The 3 months correlation between Immobile and Live is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Immobile and Live Motion Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Motion Games and Immobile 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 Immobile are associated (or correlated) with Live Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Motion Games has no effect on the direction of Immobile i.e., Immobile and Live Motion go up and down completely randomly.

Pair Corralation between Immobile and Live Motion

Assuming the 90 days trading horizon Immobile is expected to generate 0.55 times more return on investment than Live Motion. However, Immobile is 1.81 times less risky than Live Motion. It trades about 0.12 of its potential returns per unit of risk. Live Motion Games is currently generating about 0.06 per unit of risk. If you would invest  184.00  in Immobile on December 30, 2024 and sell it today you would earn a total of  45.00  from holding Immobile or generate 24.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Immobile  vs.  Live Motion Games

Immobile

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Immobile are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Immobile reported solid returns over the last few months and may actually be approaching a breakup point.

Live Motion Games

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Live Motion Games are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Live Motion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Immobile and Live Motion

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

The idea behind Immobile and Live Motion Games 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.