Correlation Between Lycos Energy and Coveo Solutions

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

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

Diversification Opportunities for Lycos Energy and Coveo Solutions

-0.34

Correlation Coefficient

Lycos Energy  Coveo Solutions

Very good diversification

The 3 months correlation between Lycos and Coveo is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lycos Energy and Coveo Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coveo Solutions and Lycos Energy 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 Lycos Energy are associated (or correlated) with Coveo Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coveo Solutions has no effect on the direction of Lycos Energy i.e., Lycos Energy and Coveo Solutions go up and down completely randomly.

Pair Corralation between Lycos Energy and Coveo Solutions

Assuming the 90 days horizon Lycos Energy is expected to generate 0.89 times more return on investment than Coveo Solutions. However, Lycos Energy is 1.12 times less risky than Coveo Solutions. It trades about 0.03 of its potential returns per unit of risk. Coveo Solutions is currently generating about -0.11 per unit of risk. If you would invest  270.00  in Lycos Energy on September 13, 2024 and sell it today you would earn a total of  3.00  from holding Lycos Energy or generate 1.11% return on investment over 90 days.

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

Lycos Energy  vs.  Coveo Solutions

Lycos Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lycos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lycos Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Coveo Solutions

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coveo Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Coveo Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lycos Energy and Coveo Solutions

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

The idea behind Lycos Energy and Coveo Solutions 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.