Correlation Between Live Motion and ADX

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

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

Diversification Opportunities for Live Motion and ADX

-0.47

Correlation Coefficient

Live Motion  ADX

Very good diversification

The 3 months correlation between Live and ADX is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Live Motion Games and ADX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADX and Live Motion 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 Motion Games are associated (or correlated) with ADX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADX has no effect on the direction of Live Motion i.e., Live Motion and ADX go up and down completely randomly.

Pair Corralation between Live Motion and ADX

Assuming the 90 days trading horizon Live Motion Games is expected to generate 1.85 times more return on investment than ADX. However, Live Motion is 1.85 times more volatile than ADX. It trades about 0.14 of its potential returns per unit of risk. ADX is currently generating about 0.1 per unit of risk. If you would invest  89.00  in Live Motion Games on October 25, 2024 and sell it today you would earn a total of  15.00  from holding Live Motion Games or generate 16.85% return on investment over 90 days.

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

Live Motion Games  vs.  ADX

Live Motion Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Motion Games has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ADX

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADX are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ADX reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Live Motion and ADX

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

The idea behind Live Motion Games and ADX 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.