Correlation Between LIV Capital and Churchill Capital

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

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

Diversification Opportunities for LIV Capital and Churchill Capital

0.88

Correlation Coefficient

LIV Capital  Churchill Capital

Very poor diversification

The 3 months correlation between LIV and Churchill is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding LIV Capital Acquisition and Churchill Capital V in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Capital and LIV Capital 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 LIV Capital Acquisition are associated (or correlated) with Churchill Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Capital has no effect on the direction of LIV Capital i.e., LIV Capital and Churchill Capital go up and down completely randomly.

Pair Corralation between LIV Capital and Churchill Capital

Given the investment horizon of 90 days LIV Capital Acquisition is expected to generate 0.11 times more return on investment than Churchill Capital. However, LIV Capital Acquisition is 8.85 times less risky than Churchill Capital. It trades about 0.19 of its potential returns per unit of risk. Churchill Capital V is currently generating about 0.02 per unit of risk. If you would invest  1,029  in LIV Capital Acquisition on September 30, 2024 and sell it today you would earn a total of  33.00  from holding LIV Capital Acquisition or generate 3.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.26%
Values	Daily Returns

LIV Capital Acquisition  vs.  Churchill Capital V

LIV Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Churchill Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with LIV Capital and Churchill Capital

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

The idea behind LIV Capital Acquisition and Churchill Capital V 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.