Correlation Between LifeSpeak and KwikClick

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

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

Diversification Opportunities for LifeSpeak and KwikClick

-0.27

Correlation Coefficient

LifeSpeak  KwikClick

Very good diversification

The 3 months correlation between LifeSpeak and KwikClick is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding LifeSpeak and KwikClick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KwikClick 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 KwikClick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KwikClick has no effect on the direction of LifeSpeak i.e., LifeSpeak and KwikClick go up and down completely randomly.

Pair Corralation between LifeSpeak and KwikClick

Assuming the 90 days horizon LifeSpeak is expected to generate 0.19 times more return on investment than KwikClick. However, LifeSpeak is 5.36 times less risky than KwikClick. It trades about 0.05 of its potential returns per unit of risk. KwikClick is currently generating about 0.0 per unit of risk. If you would invest  27.00  in LifeSpeak on November 28, 2024 and sell it today you would earn a total of  2.00  from holding LifeSpeak or generate 7.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

LifeSpeak  vs.  KwikClick

LifeSpeak

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LifeSpeak are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, LifeSpeak may actually be approaching a critical reversion point that can send shares even higher in March 2025.

KwikClick

Risk-Adjusted Performance

Very Weak

Over the last 90 days KwikClick has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, KwikClick is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with LifeSpeak and KwikClick

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

The idea behind LifeSpeak and KwikClick 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 Global Correlations module to find global opportunities by holding instruments from different markets.