Correlation Between Lifco AB and Volati AB

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

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

Diversification Opportunities for Lifco AB and Volati AB

0.69

Correlation Coefficient

Lifco AB  Volati AB

Poor diversification

The 3 months correlation between Lifco and Volati is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lifco AB and Volati AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volati AB and Lifco AB 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 Lifco AB are associated (or correlated) with Volati AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volati AB has no effect on the direction of Lifco AB i.e., Lifco AB and Volati AB go up and down completely randomly.

Pair Corralation between Lifco AB and Volati AB

Assuming the 90 days trading horizon Lifco AB is expected to generate 0.74 times more return on investment than Volati AB. However, Lifco AB is 1.35 times less risky than Volati AB. It trades about 0.02 of its potential returns per unit of risk. Volati AB is currently generating about -0.05 per unit of risk. If you would invest  32,060  in Lifco AB on August 31, 2024 and sell it today you would earn a total of  100.00  from holding Lifco AB or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Lifco AB  vs.  Volati AB

Lifco AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifco AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Lifco AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Volati AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volati AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lifco AB and Volati AB

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

The idea behind Lifco AB and Volati AB 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.