Correlation Between Living Cell and Protext Mobility

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

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

Diversification Opportunities for Living Cell and Protext Mobility

0.23

Correlation Coefficient

Living Cell  Protext Mobility

Modest diversification

The 3 months correlation between Living and Protext is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Living Cell Technologies and Protext Mobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protext Mobility and Living Cell 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 Living Cell Technologies are associated (or correlated) with Protext Mobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protext Mobility has no effect on the direction of Living Cell i.e., Living Cell and Protext Mobility go up and down completely randomly.

Pair Corralation between Living Cell and Protext Mobility

Assuming the 90 days horizon Living Cell is expected to generate 2.3 times less return on investment than Protext Mobility. In addition to that, Living Cell is 1.16 times more volatile than Protext Mobility. It trades about 0.02 of its total potential returns per unit of risk. Protext Mobility is currently generating about 0.05 per unit of volatility. If you would invest  0.12  in Protext Mobility on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Protext Mobility or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Living Cell Technologies  vs.  Protext Mobility

Living Cell Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Living Cell Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, Living Cell may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Protext Mobility

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Protext Mobility are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Protext Mobility displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Living Cell and Protext Mobility

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

The idea behind Living Cell Technologies and Protext Mobility 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.