Correlation Between Jadeart and LiveChain

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

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

Diversification Opportunities for Jadeart and LiveChain

-0.05

Correlation Coefficient

Jadeart  LiveChain

Good diversification

The 3 months correlation between Jadeart and LiveChain is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Jadeart Group and LiveChain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveChain and Jadeart 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 Jadeart Group are associated (or correlated) with LiveChain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveChain has no effect on the direction of Jadeart i.e., Jadeart and LiveChain go up and down completely randomly.

Pair Corralation between Jadeart and LiveChain

Given the investment horizon of 90 days Jadeart is expected to generate 1.63 times less return on investment than LiveChain. But when comparing it to its historical volatility, Jadeart Group is 1.51 times less risky than LiveChain. It trades about 0.09 of its potential returns per unit of risk. LiveChain is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.80  in LiveChain on September 10, 2024 and sell it today you would lose (1.54) from holding LiveChain or give up 85.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Jadeart Group  vs.  LiveChain

Jadeart Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jadeart Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Jadeart sustained solid returns over the last few months and may actually be approaching a breakup point.

LiveChain

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LiveChain are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, LiveChain demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jadeart and LiveChain

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

The idea behind Jadeart Group and LiveChain 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.