Correlation Between Livetech and CM Hospitalar

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

Diversification Opportunities for Livetech and CM Hospitalar

-0.05

Correlation Coefficient

Livetech  CM Hospitalar

Good diversification

The 3 months correlation between Livetech and VVEO3 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Livetech da Bahia and CM Hospitalar SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CM Hospitalar 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 CM Hospitalar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CM Hospitalar SA has no effect on the direction of Livetech i.e., Livetech and CM Hospitalar go up and down completely randomly.

Pair Corralation between Livetech and CM Hospitalar

Assuming the 90 days trading horizon Livetech da Bahia is expected to generate 0.97 times more return on investment than CM Hospitalar. However, Livetech da Bahia is 1.03 times less risky than CM Hospitalar. It trades about 0.15 of its potential returns per unit of risk. CM Hospitalar SA is currently generating about -0.02 per unit of risk. If you would invest  273.00  in Livetech da Bahia on April 22, 2025 and sell it today you would earn a total of  87.00  from holding Livetech da Bahia or generate 31.87% return on investment over 90 days.

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

Livetech da Bahia  vs.  CM Hospitalar SA

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.

CM Hospitalar SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Livetech and CM Hospitalar

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

The idea behind Livetech da Bahia and CM Hospitalar 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.