Correlation Between FC Investment and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both FC Investment and CleanTech Lithium 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 FC Investment and CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FC Investment Trust and CleanTech Lithium plc, you can compare the effects of market volatilities on FC Investment and CleanTech Lithium 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 FC Investment with a short position of CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and CleanTech Lithium.
Diversification Opportunities for FC Investment and CleanTech Lithium
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between FCIT and CleanTech is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc and FC Investment 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 FC Investment Trust are associated (or correlated) with CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of FC Investment i.e., FC Investment and CleanTech Lithium go up and down completely randomly.
Pair Corralation between FC Investment and CleanTech Lithium
Assuming the 90 days trading horizon FC Investment is expected to generate 3.05 times less return on investment than CleanTech Lithium. But when comparing it to its historical volatility, FC Investment Trust is 4.79 times less risky than CleanTech Lithium. It trades about 0.16 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,730 in CleanTech Lithium plc on September 14, 2024 and sell it today you would earn a total of 95.00 from holding CleanTech Lithium plc or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FC Investment Trust vs. CleanTech Lithium plc
Performance |
| Timeline |
| FC Investment Trust |
| CleanTech Lithium plc |
FC Investment and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and CleanTech Lithium
The main advantage of trading using opposite FC Investment and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium's long position.| FC Investment vs. Austevoll Seafood ASA | FC Investment vs. Edita Food Industries | FC Investment vs. Premier Foods PLC | FC Investment vs. Ebro Foods |
| CleanTech Lithium vs. Hansa Investment | CleanTech Lithium vs. FC Investment Trust | CleanTech Lithium vs. Fevertree Drinks Plc | CleanTech Lithium vs. Edita Food Industries |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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