Correlation Between Lifeclean International and Real Heart

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

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

Diversification Opportunities for Lifeclean International and Real Heart

0.52

Correlation Coefficient

Lifeclean International  Real Heart

Very weak diversification

The 3 months correlation between Lifeclean and Real is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lifeclean International AB and Real Heart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Heart and Lifeclean International 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 Lifeclean International AB are associated (or correlated) with Real Heart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Heart has no effect on the direction of Lifeclean International i.e., Lifeclean International and Real Heart go up and down completely randomly.

Pair Corralation between Lifeclean International and Real Heart

Assuming the 90 days trading horizon Lifeclean International AB is expected to under-perform the Real Heart. In addition to that, Lifeclean International is 1.42 times more volatile than Real Heart. It trades about -0.22 of its total potential returns per unit of risk. Real Heart is currently generating about -0.02 per unit of volatility. If you would invest  1,450  in Real Heart on April 23, 2025 and sell it today you would lose (100.00) from holding Real Heart or give up 6.9% of portfolio value over 90 days.

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

Lifeclean International AB  vs.  Real Heart

Lifeclean International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifeclean International AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Real Heart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Real Heart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Real Heart is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lifeclean International and Real Heart

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

The idea behind Lifeclean International AB and Real Heart 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.