Correlation Between Livetech and Locaweb Servios

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

By analyzing existing cross correlation between Livetech da Bahia and Locaweb Servios de, you can compare the effects of market volatilities on Livetech and Locaweb Servios 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 Livetech with a short position of Locaweb Servios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livetech and Locaweb Servios.

Diversification Opportunities for Livetech and Locaweb Servios

0.7

Correlation Coefficient

Livetech  Locaweb Servios

Poor diversification

The 3 months correlation between Livetech and Locaweb is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Livetech da Bahia and Locaweb Servios de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locaweb Servios de and Livetech 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 Livetech da Bahia are associated (or correlated) with Locaweb Servios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locaweb Servios de has no effect on the direction of Livetech i.e., Livetech and Locaweb Servios go up and down completely randomly.

Pair Corralation between Livetech and Locaweb Servios

Assuming the 90 days trading horizon Livetech da Bahia is expected to generate 0.83 times more return on investment than Locaweb Servios. However, Livetech da Bahia is 1.21 times less risky than Locaweb Servios. It trades about 0.01 of its potential returns per unit of risk. Locaweb Servios de is currently generating about -0.06 per unit of risk. If you would invest  360.00  in Livetech da Bahia on April 22, 2025 and sell it today you would earn a total of  0.00  from holding Livetech da Bahia or generate 0.0% return on investment over 90 days.

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

Livetech da Bahia  vs.  Locaweb Servios de

Livetech da Bahia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Livetech da Bahia are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Livetech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Locaweb Servios de

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Locaweb Servios de are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Locaweb Servios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Livetech and Locaweb Servios

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

The idea behind Livetech da Bahia and Locaweb Servios de 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.