Correlation Between CleanTech Lithium and Abingdon Health
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium and Abingdon Health 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 Abingdon Health 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 Abingdon Health Plc, you can compare the effects of market volatilities on CleanTech Lithium and Abingdon Health 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 Abingdon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Abingdon Health.
Diversification Opportunities for CleanTech Lithium and Abingdon Health
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CleanTech and Abingdon is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Abingdon Health Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abingdon Health Plc 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 Abingdon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abingdon Health Plc has no effect on the direction of CleanTech Lithium i.e., CleanTech Lithium and Abingdon Health go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Abingdon Health
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to under-perform the Abingdon Health. In addition to that, CleanTech Lithium is 1.04 times more volatile than Abingdon Health Plc. It trades about -0.03 of its total potential returns per unit of risk. Abingdon Health Plc is currently generating about 0.04 per unit of volatility. If you would invest 425.00 in Abingdon Health Plc on September 3, 2024 and sell it today you would earn a total of 275.00 from holding Abingdon Health Plc or generate 64.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Abingdon Health Plc
Performance |
| Timeline |
| CleanTech Lithium plc |
| Abingdon Health Plc |
CleanTech Lithium and Abingdon Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Abingdon Health
The main advantage of trading using opposite CleanTech Lithium and Abingdon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium position performs unexpectedly, Abingdon Health 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 Abingdon Health will offset losses from the drop in Abingdon Health's long position.The idea behind CleanTech Lithium plc and Abingdon Health Plc 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.| Abingdon Health vs. CleanTech Lithium plc | Abingdon Health vs. GoldMining | Abingdon Health vs. Panther Metals PLC | Abingdon Health vs. GreenX Metals |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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