Correlation Between Liquid Avatar and RESAAS Services

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

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

Diversification Opportunities for Liquid Avatar and RESAAS Services

0.59

Correlation Coefficient

Liquid Avatar  RESAAS Services

Very weak diversification

The 3 months correlation between Liquid and RESAAS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Liquid Avatar Technologies and RESAAS Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RESAAS Services and Liquid Avatar 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 Liquid Avatar Technologies are associated (or correlated) with RESAAS Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RESAAS Services has no effect on the direction of Liquid Avatar i.e., Liquid Avatar and RESAAS Services go up and down completely randomly.

Pair Corralation between Liquid Avatar and RESAAS Services

Assuming the 90 days horizon Liquid Avatar Technologies is expected to under-perform the RESAAS Services. In addition to that, Liquid Avatar is 1.44 times more volatile than RESAAS Services. It trades about -0.13 of its total potential returns per unit of risk. RESAAS Services is currently generating about 0.03 per unit of volatility. If you would invest  24.00  in RESAAS Services on October 22, 2024 and sell it today you would lose (2.00) from holding RESAAS Services or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Liquid Avatar Technologies  vs.  RESAAS Services

Liquid Avatar Techno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liquid Avatar Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

RESAAS Services

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RESAAS Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, RESAAS Services reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liquid Avatar and RESAAS Services

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

The idea behind Liquid Avatar Technologies and RESAAS Services 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..