Correlation Between Live Ventures and Cloudweb

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

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

Diversification Opportunities for Live Ventures and Cloudweb

0.37

Correlation Coefficient

Live Ventures  Cloudweb

Weak diversification

The 3 months correlation between Live and Cloudweb is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures and Cloudweb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudweb and Live Ventures 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 Live Ventures are associated (or correlated) with Cloudweb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudweb has no effect on the direction of Live Ventures i.e., Live Ventures and Cloudweb go up and down completely randomly.

Pair Corralation between Live Ventures and Cloudweb

Given the investment horizon of 90 days Live Ventures is expected to under-perform the Cloudweb. But the stock apears to be less risky and, when comparing its historical volatility, Live Ventures is 3.55 times less risky than Cloudweb. The stock trades about -0.23 of its potential returns per unit of risk. The Cloudweb is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2.90  in Cloudweb on December 5, 2024 and sell it today you would earn a total of  1.10  from holding Cloudweb or generate 37.93% return on investment over 90 days.

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

Live Ventures  vs.  Cloudweb

Live Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Live Ventures 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 rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cloudweb

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudweb are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Cloudweb showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Live Ventures and Cloudweb

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

The idea behind Live Ventures and Cloudweb 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.