Correlation Between Tungsten West and London Security
Can any of the company-specific risk be diversified away by investing in both Tungsten West and London Security 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 Tungsten West and London Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tungsten West PLC and London Security Plc, you can compare the effects of market volatilities on Tungsten West and London Security 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 Tungsten West with a short position of London Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tungsten West and London Security.
Diversification Opportunities for Tungsten West and London Security
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tungsten and London is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tungsten West PLC and London Security Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Security Plc and Tungsten West 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 Tungsten West PLC are associated (or correlated) with London Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Security Plc has no effect on the direction of Tungsten West i.e., Tungsten West and London Security go up and down completely randomly.
Pair Corralation between Tungsten West and London Security
Assuming the 90 days trading horizon Tungsten West PLC is expected to generate 5.36 times more return on investment than London Security. However, Tungsten West is 5.36 times more volatile than London Security Plc. It trades about 0.09 of its potential returns per unit of risk. London Security Plc is currently generating about 0.22 per unit of risk. If you would invest 300.00 in Tungsten West PLC on September 24, 2024 and sell it today you would earn a total of 25.00 from holding Tungsten West PLC or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tungsten West PLC vs. London Security Plc
Performance |
| Timeline |
| Tungsten West PLC |
| London Security Plc |
Tungsten West and London Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tungsten West and London Security
The main advantage of trading using opposite Tungsten West and London Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tungsten West position performs unexpectedly, London Security 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 London Security will offset losses from the drop in London Security's long position.| Tungsten West vs. Givaudan SA | Tungsten West vs. Antofagasta PLC | Tungsten West vs. Ferrexpo PLC | Tungsten West vs. Atalaya Mining |
| London Security vs. Tungsten West PLC | London Security vs. Argo Group Limited | London Security vs. Hardide PLC | London Security vs. Gfinity PLC |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |