Correlation Between LifeSpeak and Cuentas

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

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

Diversification Opportunities for LifeSpeak and Cuentas

0.51

Correlation Coefficient

LifeSpeak  Cuentas

Very weak diversification

The 3 months correlation between LifeSpeak and Cuentas is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding LifeSpeak and Cuentas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuentas and LifeSpeak 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 LifeSpeak are associated (or correlated) with Cuentas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuentas has no effect on the direction of LifeSpeak i.e., LifeSpeak and Cuentas go up and down completely randomly.

Pair Corralation between LifeSpeak and Cuentas

Assuming the 90 days horizon LifeSpeak is expected to generate 0.88 times more return on investment than Cuentas. However, LifeSpeak is 1.14 times less risky than Cuentas. It trades about 0.0 of its potential returns per unit of risk. Cuentas is currently generating about -0.08 per unit of risk. If you would invest  65.00  in LifeSpeak on October 5, 2024 and sell it today you would lose (36.00) from holding LifeSpeak or give up 55.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	23.48%
Values	Daily Returns

LifeSpeak  vs.  Cuentas

LifeSpeak

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LifeSpeak has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Cuentas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cuentas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Cuentas is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LifeSpeak and Cuentas

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

The idea behind LifeSpeak and Cuentas 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.