Correlation Between Lsb Industries and Altech Batteries
Can any of the company-specific risk be diversified away by investing in both Lsb Industries and Altech Batteries 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 Lsb Industries and Altech Batteries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lsb Industries and Altech Batteries Limited, you can compare the effects of market volatilities on Lsb Industries and Altech Batteries 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 Lsb Industries with a short position of Altech Batteries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsb Industries and Altech Batteries.
Diversification Opportunities for Lsb Industries and Altech Batteries
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lsb and Altech is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lsb Industries and Altech Batteries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altech Batteries and Lsb Industries 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 Lsb Industries are associated (or correlated) with Altech Batteries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altech Batteries has no effect on the direction of Lsb Industries i.e., Lsb Industries and Altech Batteries go up and down completely randomly.
Pair Corralation between Lsb Industries and Altech Batteries
Considering the 90-day investment horizon Lsb Industries is expected to generate 0.42 times more return on investment than Altech Batteries. However, Lsb Industries is 2.39 times less risky than Altech Batteries. It trades about 0.0 of its potential returns per unit of risk. Altech Batteries Limited is currently generating about -0.06 per unit of risk. If you would invest 878.00 in Lsb Industries on August 29, 2024 and sell it today you would lose (5.00) from holding Lsb Industries or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lsb Industries vs. Altech Batteries Limited
Performance |
| Timeline |
| Lsb Industries |
| Altech Batteries |
Lsb Industries and Altech Batteries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsb Industries and Altech Batteries
The main advantage of trading using opposite Lsb Industries and Altech Batteries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsb Industries position performs unexpectedly, Altech Batteries 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 Altech Batteries will offset losses from the drop in Altech Batteries' long position.| Lsb Industries vs. Green Plains Renewable | Lsb Industries vs. AdvanSix | Lsb Industries vs. Tronox Holdings PLC | Lsb Industries vs. Methanex |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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