Correlation Between Roku and LiveOne

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

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

Diversification Opportunities for Roku and LiveOne

0.02

Correlation Coefficient

Roku  LiveOne

Significant diversification

The 3 months correlation between Roku and LiveOne is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Roku Inc and LiveOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveOne and Roku 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 Roku Inc are associated (or correlated) with LiveOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveOne has no effect on the direction of Roku i.e., Roku and LiveOne go up and down completely randomly.

Pair Corralation between Roku and LiveOne

Given the investment horizon of 90 days Roku Inc is expected to generate 0.53 times more return on investment than LiveOne. However, Roku Inc is 1.87 times less risky than LiveOne. It trades about 0.11 of its potential returns per unit of risk. LiveOne is currently generating about -0.03 per unit of risk. If you would invest  6,903  in Roku Inc on November 28, 2024 and sell it today you would earn a total of  1,684  from holding Roku Inc or generate 24.4% return on investment over 90 days.

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

Roku Inc  vs.  LiveOne

Roku Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roku Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Roku unveiled solid returns over the last few months and may actually be approaching a breakup point.

LiveOne

Risk-Adjusted Performance

Very Weak

Over the last 90 days LiveOne 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 very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Roku and LiveOne

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

The idea behind Roku Inc and LiveOne 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.