Correlation Between Glencore PLC and Rock Tech
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Rock Tech 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 Glencore PLC and Rock Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore PLC ADR and Rock Tech Lithium, you can compare the effects of market volatilities on Glencore PLC and Rock Tech 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 Glencore PLC with a short position of Rock Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Rock Tech.
Diversification Opportunities for Glencore PLC and Rock Tech
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Glencore and Rock is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR and Rock Tech Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rock Tech Lithium and Glencore PLC 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 Glencore PLC ADR are associated (or correlated) with Rock Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rock Tech Lithium has no effect on the direction of Glencore PLC i.e., Glencore PLC and Rock Tech go up and down completely randomly.
Pair Corralation between Glencore PLC and Rock Tech
Assuming the 90 days horizon Glencore PLC ADR is expected to under-perform the Rock Tech. But the pink sheet apears to be less risky and, when comparing its historical volatility, Glencore PLC ADR is 2.59 times less risky than Rock Tech. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Rock Tech Lithium is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 102.00 in Rock Tech Lithium on September 1, 2024 and sell it today you would lose (27.00) from holding Rock Tech Lithium or give up 26.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Glencore PLC ADR vs. Rock Tech Lithium
Performance |
| Timeline |
| Glencore PLC ADR |
| Rock Tech Lithium |
Glencore PLC and Rock Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Rock Tech
The main advantage of trading using opposite Glencore PLC and Rock Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Rock Tech 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 Rock Tech will offset losses from the drop in Rock Tech's long position.| Glencore PLC vs. ATT Inc | Glencore PLC vs. Merck Company | Glencore PLC vs. Walt Disney | Glencore PLC vs. Caterpillar |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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