Correlation Between CleanTech Lithium and Saga Plc
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium and Saga 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 Saga 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 Saga plc, you can compare the effects of market volatilities on CleanTech Lithium and Saga 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 Saga Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Saga Plc.
Diversification Opportunities for CleanTech Lithium and Saga Plc
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CleanTech and Saga is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Saga plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga 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 Saga Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga plc has no effect on the direction of CleanTech Lithium i.e., CleanTech Lithium and Saga Plc go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Saga Plc
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to under-perform the Saga Plc. In addition to that, CleanTech Lithium is 1.62 times more volatile than Saga plc. It trades about -0.03 of its total potential returns per unit of risk. Saga plc is currently generating about 0.01 per unit of volatility. If you would invest 13,380 in Saga plc on September 14, 2024 and sell it today you would lose (1,160) from holding Saga plc or give up 8.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Saga plc
Performance |
| Timeline |
| CleanTech Lithium plc |
| Saga plc |
CleanTech Lithium and Saga Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Saga Plc
The main advantage of trading using opposite CleanTech Lithium and Saga Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium position performs unexpectedly, Saga 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 Saga Plc will offset losses from the drop in Saga Plc's long position.| CleanTech Lithium vs. Hansa Investment | CleanTech Lithium vs. FC Investment Trust | CleanTech Lithium vs. Fevertree Drinks Plc | CleanTech Lithium vs. Edita Food Industries |
| Saga Plc vs. Cognizant Technology Solutions | Saga Plc vs. CleanTech Lithium plc | Saga Plc vs. DXC Technology Co | Saga Plc vs. Albion Technology General |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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