Correlation Between Project Energy and LIV Capital

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

By analyzing existing cross correlation between Project Energy Reimagined and LIV Capital Acquisition, you can compare the effects of market volatilities on Project Energy and LIV Capital 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 Project Energy with a short position of LIV Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Project Energy and LIV Capital.

Diversification Opportunities for Project Energy and LIV Capital

-0.25

Correlation Coefficient

Project Energy  LIV Capital

Very good diversification

The 3 months correlation between Project and LIV is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Project Energy Reimagined and LIV Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIV Capital Acquisition and Project Energy 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 Project Energy Reimagined are associated (or correlated) with LIV Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIV Capital Acquisition has no effect on the direction of Project Energy i.e., Project Energy and LIV Capital go up and down completely randomly.

Pair Corralation between Project Energy and LIV Capital

Given the investment horizon of 90 days Project Energy Reimagined is expected to under-perform the LIV Capital. In addition to that, Project Energy is 54.2 times more volatile than LIV Capital Acquisition. It trades about -0.05 of its total potential returns per unit of risk. LIV Capital Acquisition is currently generating about 0.19 per unit of volatility. If you would invest  1,030  in LIV Capital Acquisition on October 4, 2024 and sell it today you would earn a total of  32.00  from holding LIV Capital Acquisition or generate 3.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	33.42%
Values	Daily Returns

Project Energy Reimagined  vs.  LIV Capital Acquisition

Project Energy Reimagined

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Project Energy Reimagined has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Project Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

LIV Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIV Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LIV Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Project Energy and LIV Capital

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

The idea behind Project Energy Reimagined and LIV Capital Acquisition 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.