Correlation Between CleanTech Lithium and Lendinvest PLC
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium and Lendinvest PLC 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 Lendinvest PLC 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 Lendinvest PLC, you can compare the effects of market volatilities on CleanTech Lithium and Lendinvest PLC 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 Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Lendinvest PLC.
Diversification Opportunities for CleanTech Lithium and Lendinvest PLC
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CleanTech and Lendinvest is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest 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 Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of CleanTech Lithium i.e., CleanTech Lithium and Lendinvest PLC go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Lendinvest PLC
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to generate 3.23 times more return on investment than Lendinvest PLC. However, CleanTech Lithium is 3.23 times more volatile than Lendinvest PLC. It trades about -0.01 of its potential returns per unit of risk. Lendinvest PLC is currently generating about -0.18 per unit of risk. If you would invest 1,850 in CleanTech Lithium plc on September 13, 2024 and sell it today you would lose (25.00) from holding CleanTech Lithium plc or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Lendinvest PLC
Performance |
| Timeline |
| CleanTech Lithium plc |
| Lendinvest PLC |
CleanTech Lithium and Lendinvest PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Lendinvest PLC
The main advantage of trading using opposite CleanTech Lithium and Lendinvest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium position performs unexpectedly, Lendinvest PLC 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 Lendinvest PLC will offset losses from the drop in Lendinvest PLC's long position.| CleanTech Lithium vs. Kinnevik Investment AB | CleanTech Lithium vs. Bloomsbury Publishing Plc | CleanTech Lithium vs. New Residential Investment | CleanTech Lithium vs. Monks Investment Trust |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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