Correlation Between Livermore Investments and Cornish Metals

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

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

Diversification Opportunities for Livermore Investments and Cornish Metals

0.82

Correlation Coefficient

Livermore Investments  Cornish Metals

Very poor diversification

The 3 months correlation between Livermore and Cornish is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments Group and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals and Livermore Investments 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 Livermore Investments Group are associated (or correlated) with Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Livermore Investments i.e., Livermore Investments and Cornish Metals go up and down completely randomly.

Pair Corralation between Livermore Investments and Cornish Metals

Assuming the 90 days trading horizon Livermore Investments is expected to generate 1.56 times less return on investment than Cornish Metals. But when comparing it to its historical volatility, Livermore Investments Group is 2.81 times less risky than Cornish Metals. It trades about 0.2 of its potential returns per unit of risk. Cornish Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  605.00  in Cornish Metals on September 21, 2024 and sell it today you would earn a total of  270.00  from holding Cornish Metals or generate 44.63% return on investment over 90 days.

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

Livermore Investments Group  vs.  Cornish Metals

Livermore Investments

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Livermore Investments Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Livermore Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cornish Metals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cornish Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cornish Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Livermore Investments and Cornish Metals

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

The idea behind Livermore Investments Group and Cornish Metals 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.