Correlation Between CleanTech Lithium and Auction Technology
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium and Auction Technology 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 Auction Technology 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 Auction Technology Group, you can compare the effects of market volatilities on CleanTech Lithium and Auction Technology 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 Auction Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Auction Technology.
Diversification Opportunities for CleanTech Lithium and Auction Technology
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CleanTech and Auction is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Auction Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auction Technology 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 Auction Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auction Technology has no effect on the direction of CleanTech Lithium i.e., CleanTech Lithium and Auction Technology go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Auction Technology
Assuming the 90 days trading horizon CleanTech Lithium is expected to generate 7.15 times less return on investment than Auction Technology. In addition to that, CleanTech Lithium is 1.92 times more volatile than Auction Technology Group. It trades about 0.02 of its total potential returns per unit of risk. Auction Technology Group is currently generating about 0.27 per unit of volatility. If you would invest 54,900 in Auction Technology Group on November 6, 2024 and sell it today you would earn a total of 6,900 from holding Auction Technology Group or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Auction Technology Group
Performance |
| Timeline |
| CleanTech Lithium plc |
| Auction Technology |
CleanTech Lithium and Auction Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Auction Technology
The main advantage of trading using opposite CleanTech Lithium and Auction Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium position performs unexpectedly, Auction Technology 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 Auction Technology will offset losses from the drop in Auction Technology's long position.| CleanTech Lithium vs. Gamma Communications PLC | CleanTech Lithium vs. Verizon Communications | CleanTech Lithium vs. Clean Power Hydrogen | CleanTech Lithium vs. Fonix Mobile plc |
| Auction Technology vs. Zoom Video Communications | Auction Technology vs. Empire Metals Limited | Auction Technology vs. Cairo Communication SpA | Auction Technology vs. GoldMining |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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