Correlation Between LiveChain and Coastal Capital

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

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

Diversification Opportunities for LiveChain and Coastal Capital

0.06

Correlation Coefficient

LiveChain  Coastal Capital

Significant diversification

The 3 months correlation between LiveChain and Coastal is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding LiveChain and Coastal Capital Acq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Capital Acq and LiveChain 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 LiveChain are associated (or correlated) with Coastal Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Capital Acq has no effect on the direction of LiveChain i.e., LiveChain and Coastal Capital go up and down completely randomly.

Pair Corralation between LiveChain and Coastal Capital

Given the investment horizon of 90 days LiveChain is expected to generate 1.76 times more return on investment than Coastal Capital. However, LiveChain is 1.76 times more volatile than Coastal Capital Acq. It trades about 0.11 of its potential returns per unit of risk. Coastal Capital Acq is currently generating about 0.12 per unit of risk. If you would invest  0.95  in LiveChain on September 11, 2024 and sell it today you would lose (0.69) from holding LiveChain or give up 72.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

LiveChain  vs.  Coastal Capital Acq

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.

Coastal Capital Acq

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Capital Acq are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Coastal Capital revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LiveChain and Coastal Capital

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

The idea behind LiveChain and Coastal Capital Acq 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.