Correlation Between Inspiration Healthcare and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both Inspiration Healthcare 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 Inspiration Healthcare and CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspiration Healthcare Group and CleanTech Lithium plc, you can compare the effects of market volatilities on Inspiration Healthcare 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 Inspiration Healthcare with a short position of CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspiration Healthcare and CleanTech Lithium.
Diversification Opportunities for Inspiration Healthcare and CleanTech Lithium
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Inspiration and CleanTech is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Inspiration Healthcare Group 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 Inspiration Healthcare 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 Inspiration Healthcare Group 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 Inspiration Healthcare i.e., Inspiration Healthcare and CleanTech Lithium go up and down completely randomly.
Pair Corralation between Inspiration Healthcare and CleanTech Lithium
Assuming the 90 days trading horizon Inspiration Healthcare Group is expected to under-perform the CleanTech Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Inspiration Healthcare Group is 1.03 times less risky than CleanTech Lithium. The stock trades about -0.07 of its potential returns per unit of risk. The CleanTech Lithium plc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,100 in CleanTech Lithium plc on October 18, 2024 and sell it today you would lose (1,470) from holding CleanTech Lithium plc or give up 47.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Inspiration Healthcare Group vs. CleanTech Lithium plc
Performance |
| Timeline |
| Inspiration Healthcare |
| CleanTech Lithium plc |
Inspiration Healthcare and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspiration Healthcare and CleanTech Lithium
The main advantage of trading using opposite Inspiration Healthcare and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspiration Healthcare 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.| Inspiration Healthcare vs. Cornish Metals | Inspiration Healthcare vs. Datagroup SE | Inspiration Healthcare vs. Alliance Data Systems | Inspiration Healthcare vs. AMG Advanced Metallurgical |
| CleanTech Lithium vs. Central Asia Metals | CleanTech Lithium vs. GreenX Metals | CleanTech Lithium vs. AMG Advanced Metallurgical | CleanTech Lithium vs. Power Metal Resources |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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