Correlation Between ESGL Holdings and Polarityte

Can any of the company-specific risk be diversified away by investing in both ESGL Holdings and Polarityte 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 ESGL Holdings and Polarityte into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ESGL Holdings Limited and Polarityte, you can compare the effects of market volatilities on ESGL Holdings and Polarityte 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 ESGL Holdings with a short position of Polarityte. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESGL Holdings and Polarityte.

Diversification Opportunities for ESGL Holdings and Polarityte

-0.47

Correlation Coefficient

ESGL Holdings  Polarityte

Very good diversification

The 3 months correlation between ESGL and Polarityte is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding ESGL Holdings Limited and Polarityte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polarityte and ESGL Holdings 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 ESGL Holdings Limited are associated (or correlated) with Polarityte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polarityte has no effect on the direction of ESGL Holdings i.e., ESGL Holdings and Polarityte go up and down completely randomly.

Pair Corralation between ESGL Holdings and Polarityte

If you would invest  1.20  in ESGL Holdings Limited on October 10, 2024 and sell it today you would earn a total of  0.02  from holding ESGL Holdings Limited or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	2.0%
Values	Daily Returns

ESGL Holdings Limited  vs.  Polarityte

ESGL Holdings Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ESGL Holdings Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, ESGL Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Polarityte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polarityte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Polarityte is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ESGL Holdings and Polarityte

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

The idea behind ESGL Holdings Limited and Polarityte 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.