Correlation Between Eagle Eye and CleanTech Lithium

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

By analyzing existing cross correlation between Eagle Eye Solutions and CleanTech Lithium plc, you can compare the effects of market volatilities on Eagle Eye 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 Eagle Eye with a short position of CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Eye and CleanTech Lithium.

Diversification Opportunities for Eagle Eye and CleanTech Lithium

0.17

Correlation Coefficient

Eagle Eye  CleanTech Lithium

Average diversification

The 3 months correlation between Eagle and CleanTech is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Eye Solutions 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 Eagle Eye 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 Eagle Eye Solutions 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 Eagle Eye i.e., Eagle Eye and CleanTech Lithium go up and down completely randomly.

Pair Corralation between Eagle Eye and CleanTech Lithium

Assuming the 90 days trading horizon Eagle Eye Solutions is expected to generate 0.21 times more return on investment than CleanTech Lithium. However, Eagle Eye Solutions is 4.72 times less risky than CleanTech Lithium. It trades about 0.02 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.17 per unit of risk. If you would invest  47,500  in Eagle Eye Solutions on September 16, 2024 and sell it today you would earn a total of  500.00  from holding Eagle Eye Solutions or generate 1.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eagle Eye Solutions  vs.  CleanTech Lithium plc

Eagle Eye Solutions

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Eye Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Eagle Eye is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CleanTech Lithium plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CleanTech Lithium plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Eagle Eye and CleanTech Lithium

The main advantage of trading using opposite Eagle Eye and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Eye 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.

The idea behind Eagle Eye Solutions and CleanTech Lithium 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.