Correlation Between Livetech and Raia Drogasil

Can any of the company-specific risk be diversified away by investing in both Livetech and Raia Drogasil 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 Raia Drogasil 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 Raia Drogasil SA, you can compare the effects of market volatilities on Livetech and Raia Drogasil 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 Raia Drogasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livetech and Raia Drogasil.

Diversification Opportunities for Livetech and Raia Drogasil

-0.81

Correlation Coefficient

Livetech  Raia Drogasil

Pay attention - limited upside

The 3 months correlation between Livetech and Raia is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Livetech da Bahia and Raia Drogasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raia Drogasil SA 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 Raia Drogasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raia Drogasil SA has no effect on the direction of Livetech i.e., Livetech and Raia Drogasil go up and down completely randomly.

Pair Corralation between Livetech and Raia Drogasil

Assuming the 90 days trading horizon Livetech da Bahia is expected to generate 1.15 times more return on investment than Raia Drogasil. However, Livetech is 1.15 times more volatile than Raia Drogasil SA. It trades about 0.13 of its potential returns per unit of risk. Raia Drogasil SA is currently generating about -0.17 per unit of risk. If you would invest  277.00  in Livetech da Bahia on April 24, 2025 and sell it today you would earn a total of  74.00  from holding Livetech da Bahia or generate 26.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Livetech da Bahia  vs.  Raia Drogasil SA

Livetech da Bahia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Livetech da Bahia are ranked lower than 10 (%) 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.

Raia Drogasil SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Raia Drogasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Livetech and Raia Drogasil

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

The idea behind Livetech da Bahia and Raia Drogasil SA 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 Anywhere module to track or share privately all of your investments from the convenience of any device.