Correlation Between Livetech and Costco Wholesale

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

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

Diversification Opportunities for Livetech and Costco Wholesale

-0.23

Correlation Coefficient

Livetech  Costco Wholesale

Very good diversification

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

Pair Corralation between Livetech and Costco Wholesale

Assuming the 90 days trading horizon Livetech da Bahia is expected to under-perform the Costco Wholesale. In addition to that, Livetech is 1.24 times more volatile than Costco Wholesale. It trades about -0.18 of its total potential returns per unit of risk. Costco Wholesale is currently generating about 0.03 per unit of volatility. If you would invest  14,611  in Costco Wholesale on November 29, 2024 and sell it today you would earn a total of  408.00  from holding Costco Wholesale or generate 2.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Livetech da Bahia  vs.  Costco Wholesale

Livetech da Bahia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Livetech da Bahia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Costco Wholesale

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Costco Wholesale is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Livetech and Costco Wholesale

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

The idea behind Livetech da Bahia and Costco Wholesale 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.