Correlation Between Liberty Resources and L Catterton

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

By analyzing existing cross correlation between Liberty Resources Acquisition and L Catterton Asia, you can compare the effects of market volatilities on Liberty Resources and L Catterton 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 Liberty Resources with a short position of L Catterton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Resources and L Catterton.

Diversification Opportunities for Liberty Resources and L Catterton

0.0

Correlation Coefficient

Liberty Resources  L Catterton

Pay attention - limited upside

The 3 months correlation between Liberty and LCAAW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Resources Acquisition and L Catterton Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Catterton Asia and Liberty Resources 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 Liberty Resources Acquisition are associated (or correlated) with L Catterton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Catterton Asia has no effect on the direction of Liberty Resources i.e., Liberty Resources and L Catterton go up and down completely randomly.

Pair Corralation between Liberty Resources and L Catterton

Assuming the 90 days horizon Liberty Resources is expected to generate 12.69 times less return on investment than L Catterton. But when comparing it to its historical volatility, Liberty Resources Acquisition is 6.69 times less risky than L Catterton. It trades about 0.05 of its potential returns per unit of risk. L Catterton Asia is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2.01  in L Catterton Asia on October 11, 2024 and sell it today you would earn a total of  46.99  from holding L Catterton Asia or generate 2337.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Liberty Resources Acquisition  vs.  L Catterton Asia

Liberty Resources

Risk-Adjusted Performance

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Very Weak

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

L Catterton Asia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Liberty Resources and L Catterton

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

The idea behind Liberty Resources Acquisition and L Catterton Asia 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.