Correlation Between ITM Power and Powercell Sweden
Can any of the company-specific risk be diversified away by investing in both ITM Power and Powercell Sweden 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 ITM Power and Powercell Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITM Power Plc and Powercell Sweden, you can compare the effects of market volatilities on ITM Power and Powercell Sweden 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 ITM Power with a short position of Powercell Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITM Power and Powercell Sweden.
Diversification Opportunities for ITM Power and Powercell Sweden
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ITM and Powercell is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ITM Power Plc and Powercell Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powercell Sweden and ITM Power 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 ITM Power Plc are associated (or correlated) with Powercell Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powercell Sweden has no effect on the direction of ITM Power i.e., ITM Power and Powercell Sweden go up and down completely randomly.
Pair Corralation between ITM Power and Powercell Sweden
Assuming the 90 days horizon ITM Power Plc is expected to under-perform the Powercell Sweden. But the stock apears to be less risky and, when comparing its historical volatility, ITM Power Plc is 1.15 times less risky than Powercell Sweden. The stock trades about -0.05 of its potential returns per unit of risk. The Powercell Sweden is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 304.00 in Powercell Sweden on August 25, 2024 and sell it today you would lose (22.00) from holding Powercell Sweden or give up 7.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITM Power Plc vs. Powercell Sweden
Performance |
| Timeline |
| ITM Power Plc |
| Powercell Sweden |
ITM Power and Powercell Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITM Power and Powercell Sweden
The main advantage of trading using opposite ITM Power and Powercell Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITM Power position performs unexpectedly, Powercell Sweden 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 Powercell Sweden will offset losses from the drop in Powercell Sweden's long position.| ITM Power vs. Amphenol | ITM Power vs. Hon Hai Precision | ITM Power vs. Samsung SDI Co | ITM Power vs. Corning Incorporated |
| Powercell Sweden vs. YASKAWA ELEC UNSP | Powercell Sweden vs. Varta AG | Powercell Sweden vs. OSRAM LICHT N | Powercell Sweden vs. Bloom Energy |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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