Correlation Between LifeSpeak and Treasure Global

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

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

Diversification Opportunities for LifeSpeak and Treasure Global

-0.49

Correlation Coefficient

LifeSpeak  Treasure Global

Very good diversification

The 3 months correlation between LifeSpeak and Treasure is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding LifeSpeak and Treasure Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasure Global 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 Treasure Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasure Global has no effect on the direction of LifeSpeak i.e., LifeSpeak and Treasure Global go up and down completely randomly.

Pair Corralation between LifeSpeak and Treasure Global

Assuming the 90 days horizon LifeSpeak is expected to generate 0.17 times more return on investment than Treasure Global. However, LifeSpeak is 5.97 times less risky than Treasure Global. It trades about 0.1 of its potential returns per unit of risk. Treasure Global is currently generating about 0.0 per unit of risk. If you would invest  25.00  in LifeSpeak on December 4, 2024 and sell it today you would earn a total of  4.00  from holding LifeSpeak or generate 16.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

LifeSpeak  vs.  Treasure Global

LifeSpeak

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LifeSpeak are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, LifeSpeak reported solid returns over the last few months and may actually be approaching a breakup point.

Treasure Global

Risk-Adjusted Performance

Very Weak

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

Pair Trading with LifeSpeak and Treasure Global

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

The idea behind LifeSpeak and Treasure Global 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.