Correlation Between Livermore Investments and Premier African

Can any of the company-specific risk be diversified away by investing in both Livermore Investments and Premier African 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 Premier African 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 Premier African Minerals, you can compare the effects of market volatilities on Livermore Investments and Premier African 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 Premier African. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livermore Investments and Premier African.

Diversification Opportunities for Livermore Investments and Premier African

-0.04

Correlation Coefficient

Livermore Investments  Premier African

Good diversification

The 3 months correlation between Livermore and Premier is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments Group and Premier African Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier African Minerals 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 Premier African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier African Minerals has no effect on the direction of Livermore Investments i.e., Livermore Investments and Premier African go up and down completely randomly.

Pair Corralation between Livermore Investments and Premier African

Assuming the 90 days trading horizon Livermore Investments is expected to generate 6.79 times less return on investment than Premier African. But when comparing it to its historical volatility, Livermore Investments Group is 14.82 times less risky than Premier African. It trades about 0.15 of its potential returns per unit of risk. Premier African Minerals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4.25  in Premier African Minerals on September 23, 2024 and sell it today you would earn a total of  0.60  from holding Premier African Minerals or generate 14.12% return on investment over 90 days.

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

Livermore Investments Group  vs.  Premier African Minerals

Livermore Investments

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Livermore Investments Group are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Livermore Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Premier African Minerals

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Livermore Investments and Premier African

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

The idea behind Livermore Investments Group and Premier African Minerals 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..