Correlation Between HAYDALE GRAPHINDUSLS-02 and ITM Power

Can any of the company-specific risk be diversified away by investing in both HAYDALE GRAPHINDUSLS-02 and ITM Power 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 HAYDALE GRAPHINDUSLS-02 and ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HAYDALE GRAPHINDUSLS 02 and ITM Power Plc, you can compare the effects of market volatilities on HAYDALE GRAPHINDUSLS-02 and ITM Power 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 HAYDALE GRAPHINDUSLS-02 with a short position of ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of HAYDALE GRAPHINDUSLS-02 and ITM Power.

Diversification Opportunities for HAYDALE GRAPHINDUSLS-02 and ITM Power

0.1

Correlation Coefficient

HAYDALE GRAPHINDUSLS-02  ITM Power

Average diversification

The 3 months correlation between HAYDALE and ITM is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding HAYDALE GRAPHINDUSLS 02 and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc and HAYDALE GRAPHINDUSLS-02 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 HAYDALE GRAPHINDUSLS 02 are associated (or correlated) with ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of HAYDALE GRAPHINDUSLS-02 i.e., HAYDALE GRAPHINDUSLS-02 and ITM Power go up and down completely randomly.

Pair Corralation between HAYDALE GRAPHINDUSLS-02 and ITM Power

Assuming the 90 days horizon HAYDALE GRAPHINDUSLS 02 is expected to generate 40.32 times more return on investment than ITM Power. However, HAYDALE GRAPHINDUSLS-02 is 40.32 times more volatile than ITM Power Plc. It trades about 0.22 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.03 per unit of risk. If you would invest  0.02  in HAYDALE GRAPHINDUSLS 02 on December 19, 2024 and sell it today you would earn a total of  0.02  from holding HAYDALE GRAPHINDUSLS 02 or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

HAYDALE GRAPHINDUSLS 02  vs.  ITM Power Plc

HAYDALE GRAPHINDUSLS-02

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HAYDALE GRAPHINDUSLS 02 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, HAYDALE GRAPHINDUSLS-02 reported solid returns over the last few months and may actually be approaching a breakup point.

ITM Power Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITM Power Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with HAYDALE GRAPHINDUSLS-02 and ITM Power

The main advantage of trading using opposite HAYDALE GRAPHINDUSLS-02 and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HAYDALE GRAPHINDUSLS-02 position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.

The idea behind HAYDALE GRAPHINDUSLS 02 and ITM Power Plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.