Correlation Between Live Ventures and Continental

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

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

Diversification Opportunities for Live Ventures and Continental

-0.57

Correlation Coefficient

Live Ventures  Continental

Excellent diversification

The 3 months correlation between Live and Continental is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures and Continental AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental AG PK 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental AG PK has no effect on the direction of Live Ventures i.e., Live Ventures and Continental go up and down completely randomly.

Pair Corralation between Live Ventures and Continental

Given the investment horizon of 90 days Live Ventures is expected to under-perform the Continental. In addition to that, Live Ventures is 2.27 times more volatile than Continental AG PK. It trades about -0.07 of its total potential returns per unit of risk. Continental AG PK is currently generating about 0.09 per unit of volatility. If you would invest  661.00  in Continental AG PK on December 4, 2024 and sell it today you would earn a total of  50.00  from holding Continental AG PK or generate 7.56% return on investment over 90 days.

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

Live Ventures  vs.  Continental AG PK

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.

Continental AG PK

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Continental AG PK are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Continental may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Live Ventures and Continental

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

The idea behind Live Ventures and Continental AG PK 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.