Correlation Between CleanTech Lithium and Public Service
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium and Public Service 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 CleanTech Lithium and Public Service into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CleanTech Lithium plc and Public Service Enterprise, you can compare the effects of market volatilities on CleanTech Lithium and Public Service 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 CleanTech Lithium with a short position of Public Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Public Service.
Diversification Opportunities for CleanTech Lithium and Public Service
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CleanTech and Public is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Public Service Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Service Enterprise and CleanTech Lithium 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 CleanTech Lithium plc are associated (or correlated) with Public Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Service Enterprise has no effect on the direction of CleanTech Lithium i.e., CleanTech Lithium and Public Service go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Public Service
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to under-perform the Public Service. In addition to that, CleanTech Lithium is 3.24 times more volatile than Public Service Enterprise. It trades about -0.15 of its total potential returns per unit of risk. Public Service Enterprise is currently generating about 0.11 per unit of volatility. If you would invest 7,573 in Public Service Enterprise on October 26, 2024 and sell it today you would earn a total of 1,300 from holding Public Service Enterprise or generate 17.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.0% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Public Service Enterprise
Performance |
| Timeline |
| CleanTech Lithium plc |
| Public Service Enterprise |
CleanTech Lithium and Public Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Public Service
The main advantage of trading using opposite CleanTech Lithium and Public Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium position performs unexpectedly, Public Service 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 Public Service will offset losses from the drop in Public Service's long position.| CleanTech Lithium vs. Diversified Energy | CleanTech Lithium vs. Veolia Environnement VE | CleanTech Lithium vs. Science in Sport | CleanTech Lithium vs. Aberdeen Diversified Income |
| Public Service vs. CleanTech Lithium plc | Public Service vs. Spotify Technology SA | Public Service vs. Sunny Optical Technology | Public Service vs. DXC Technology Co |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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