Correlation Between Livewire Ergogenics and Emergent Health

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

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

Diversification Opportunities for Livewire Ergogenics and Emergent Health

0.16

Correlation Coefficient

Livewire Ergogenics  Emergent Health

Average diversification

The 3 months correlation between Livewire and Emergent is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Livewire Ergogenics and Emergent Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Health Corp and Livewire Ergogenics 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 Livewire Ergogenics are associated (or correlated) with Emergent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Health Corp has no effect on the direction of Livewire Ergogenics i.e., Livewire Ergogenics and Emergent Health go up and down completely randomly.

Pair Corralation between Livewire Ergogenics and Emergent Health

Given the investment horizon of 90 days Livewire Ergogenics is expected to under-perform the Emergent Health. But the pink sheet apears to be less risky and, when comparing its historical volatility, Livewire Ergogenics is 1.18 times less risky than Emergent Health. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Emergent Health Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Emergent Health Corp on November 29, 2024 and sell it today you would lose (0.02) from holding Emergent Health Corp or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Livewire Ergogenics  vs.  Emergent Health Corp

Livewire Ergogenics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Livewire Ergogenics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Emergent Health Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Health Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Emergent Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Livewire Ergogenics and Emergent Health

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

The idea behind Livewire Ergogenics and Emergent Health Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.