Correlation Between ITM Power and Rosinbomb
Can any of the company-specific risk be diversified away by investing in both ITM Power and Rosinbomb 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 Rosinbomb 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 Rosinbomb, you can compare the effects of market volatilities on ITM Power and Rosinbomb 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 Rosinbomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITM Power and Rosinbomb.
Diversification Opportunities for ITM Power and Rosinbomb
Very good diversification
The 3 months correlation between ITM and Rosinbomb is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding ITM Power Plc and Rosinbomb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rosinbomb 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 Rosinbomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rosinbomb has no effect on the direction of ITM Power i.e., ITM Power and Rosinbomb go up and down completely randomly.
Pair Corralation between ITM Power and Rosinbomb
Assuming the 90 days horizon ITM Power Plc is expected to under-perform the Rosinbomb. But the pink sheet apears to be less risky and, when comparing its historical volatility, ITM Power Plc is 2.03 times less risky than Rosinbomb. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Rosinbomb is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 0.59 in Rosinbomb on November 29, 2024 and sell it today you would earn a total of 0.41 from holding Rosinbomb or generate 69.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITM Power Plc vs. Rosinbomb
Performance |
| Timeline |
| ITM Power Plc |
| Rosinbomb |
ITM Power and Rosinbomb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITM Power and Rosinbomb
The main advantage of trading using opposite ITM Power and Rosinbomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITM Power position performs unexpectedly, Rosinbomb 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 Rosinbomb will offset losses from the drop in Rosinbomb's long position.| ITM Power vs. Next Hydrogen Solutions | ITM Power vs. Nel ASA | ITM Power vs. Titan Logix Corp | ITM Power vs. Weir Group PLC |
| Rosinbomb vs. Titan Logix Corp | Rosinbomb vs. Nel ASA | Rosinbomb vs. Weir Group PLC | Rosinbomb vs. Nel ASA |
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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