Correlation Between Obayashi and Liquid Avatar

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

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

Diversification Opportunities for Obayashi and Liquid Avatar

0.0

Correlation Coefficient

Obayashi  Liquid Avatar

Pay attention - limited upside

The 3 months correlation between Obayashi and Liquid is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Obayashi and Liquid Avatar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquid Avatar Techno and Obayashi 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 Obayashi are associated (or correlated) with Liquid Avatar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquid Avatar Techno has no effect on the direction of Obayashi i.e., Obayashi and Liquid Avatar go up and down completely randomly.

Pair Corralation between Obayashi and Liquid Avatar

Assuming the 90 days horizon Obayashi is expected to generate 0.2 times more return on investment than Liquid Avatar. However, Obayashi is 5.05 times less risky than Liquid Avatar. It trades about 0.08 of its potential returns per unit of risk. Liquid Avatar Technologies is currently generating about -0.09 per unit of risk. If you would invest  1,108  in Obayashi on December 10, 2024 and sell it today you would earn a total of  192.00  from holding Obayashi or generate 17.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Obayashi  vs.  Liquid Avatar Technologies

Obayashi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Obayashi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Liquid Avatar Techno

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liquid Avatar Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Liquid Avatar is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Obayashi and Liquid Avatar

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

The idea behind Obayashi and Liquid Avatar Technologies 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.