Correlation Between Dear Cashmere and ITM Power
Can any of the company-specific risk be diversified away by investing in both Dear Cashmere and ITM Power 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 Dear Cashmere and ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dear Cashmere Holding and ITM Power Plc, you can compare the effects of market volatilities on Dear Cashmere and ITM Power 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 Dear Cashmere with a short position of ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and ITM Power.
Diversification Opportunities for Dear Cashmere and ITM Power
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dear and ITM is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc and Dear Cashmere 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 Dear Cashmere Holding are associated (or correlated) with ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and ITM Power go up and down completely randomly.
Pair Corralation between Dear Cashmere and ITM Power
Given the investment horizon of 90 days Dear Cashmere Holding is expected to generate 2.7 times more return on investment than ITM Power. However, Dear Cashmere is 2.7 times more volatile than ITM Power Plc. It trades about 0.08 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.05 per unit of risk. If you would invest 12.00 in Dear Cashmere Holding on September 3, 2024 and sell it today you would earn a total of 5.00 from holding Dear Cashmere Holding or generate 41.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dear Cashmere Holding vs. ITM Power Plc
Performance |
| Timeline |
| Dear Cashmere Holding |
| ITM Power Plc |
Dear Cashmere and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dear Cashmere and ITM Power
The main advantage of trading using opposite Dear Cashmere and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dear Cashmere position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Dear Cashmere vs. Salesforce | Dear Cashmere vs. SAP SE ADR | Dear Cashmere vs. ServiceNow | Dear Cashmere vs. Intuit Inc |
| ITM Power vs. Dear Cashmere Holding | ITM Power vs. Goff Corp | ITM Power vs. Wialan Technologies | ITM Power vs. Cgrowth Capital |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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