Correlation Between London Security and Live Nation

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

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

Diversification Opportunities for London Security and Live Nation

0.68

Correlation Coefficient

London Security  Live Nation

Poor diversification

The 3 months correlation between London and Live is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and London Security 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 London Security Plc are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of London Security i.e., London Security and Live Nation go up and down completely randomly.

Pair Corralation between London Security and Live Nation

Assuming the 90 days trading horizon London Security Plc is expected to generate 0.69 times more return on investment than Live Nation. However, London Security Plc is 1.44 times less risky than Live Nation. It trades about 0.17 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.03 per unit of risk. If you would invest  325,000  in London Security Plc on December 1, 2024 and sell it today you would earn a total of  35,000  from holding London Security Plc or generate 10.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

London Security Plc  vs.  Live Nation Entertainment

London Security Plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in London Security Plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, London Security may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Live Nation Entertainment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Live Nation is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with London Security and Live Nation

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

The idea behind London Security Plc and Live Nation Entertainment 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.