Correlation Between Pets At and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both Pets At 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 Pets At and CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pets at Home and CleanTech Lithium plc, you can compare the effects of market volatilities on Pets At 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 Pets At with a short position of CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pets At and CleanTech Lithium.
Diversification Opportunities for Pets At and CleanTech Lithium
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pets and CleanTech is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pets at Home 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 Pets At 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 Pets at Home 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 Pets At i.e., Pets At and CleanTech Lithium go up and down completely randomly.
Pair Corralation between Pets At and CleanTech Lithium
Assuming the 90 days trading horizon Pets at Home is expected to generate 0.39 times more return on investment than CleanTech Lithium. However, Pets at Home is 2.59 times less risky than CleanTech Lithium. It trades about -0.05 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.05 per unit of risk. If you would invest 36,823 in Pets at Home on September 2, 2024 and sell it today you would lose (13,563) from holding Pets at Home or give up 36.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pets at Home vs. CleanTech Lithium plc
Performance |
| Timeline |
| Pets at Home |
| CleanTech Lithium plc |
Pets At and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pets At and CleanTech Lithium
The main advantage of trading using opposite Pets At and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pets At 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.| Pets At vs. Ithaca Energy PLC | Pets At vs. SANTANDER UK 10 | Pets At vs. Coor Service Management | Pets At vs. Franklin FTSE Brazil |
| CleanTech Lithium vs. Givaudan SA | CleanTech Lithium vs. Antofagasta PLC | CleanTech Lithium vs. Centamin PLC | CleanTech Lithium vs. Atalaya Mining |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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