Correlation Between New Wave and Live Current

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

By analyzing existing cross correlation between New Wave Holdings and Live Current Media, you can compare the effects of market volatilities on New Wave and Live Current 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 New Wave with a short position of Live Current. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Wave and Live Current.

Diversification Opportunities for New Wave and Live Current

0.0

Correlation Coefficient

New Wave  Live Current

Pay attention - limited upside

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

Pair Corralation between New Wave and Live Current

If you would invest  0.80  in New Wave Holdings on September 3, 2024 and sell it today you would earn a total of  0.41  from holding New Wave Holdings or generate 51.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	84.62%
Values	Daily Returns

New Wave Holdings  vs.  Live Current Media

New Wave Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Wave Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, New Wave reported solid returns over the last few months and may actually be approaching a breakup point.

Live Current Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Current Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Live Current is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with New Wave and Live Current

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

The idea behind New Wave Holdings and Live Current Media 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.

Check out your portfolio center.

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.