Correlation Between CleanTech Lithium and Vinci SA
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium and Vinci SA 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 Vinci SA 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 Vinci SA, you can compare the effects of market volatilities on CleanTech Lithium and Vinci SA 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 Vinci SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Vinci SA.
Diversification Opportunities for CleanTech Lithium and Vinci SA
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CleanTech and Vinci is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Vinci SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA 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 Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA has no effect on the direction of CleanTech Lithium i.e., CleanTech Lithium and Vinci SA go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Vinci SA
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to generate 2.35 times more return on investment than Vinci SA. However, CleanTech Lithium is 2.35 times more volatile than Vinci SA. It trades about 0.08 of its potential returns per unit of risk. Vinci SA is currently generating about 0.04 per unit of risk. If you would invest 1,730 in CleanTech Lithium plc on September 15, 2024 and sell it today you would earn a total of 70.00 from holding CleanTech Lithium plc or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Vinci SA
Performance |
| Timeline |
| CleanTech Lithium plc |
| Vinci SA |
CleanTech Lithium and Vinci SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Vinci SA
The main advantage of trading using opposite CleanTech Lithium and Vinci SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium position performs unexpectedly, Vinci SA 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 Vinci SA will offset losses from the drop in Vinci SA's long position.| CleanTech Lithium vs. Givaudan SA | CleanTech Lithium vs. Antofagasta PLC | CleanTech Lithium vs. Ferrexpo PLC | CleanTech Lithium vs. Atalaya Mining |
| Vinci SA vs. Taylor Maritime Investments | Vinci SA vs. Kinnevik Investment AB | Vinci SA vs. CleanTech Lithium plc | Vinci SA vs. Aberdeen Diversified Income |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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