Correlation Between Greater Than and Litium AB

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

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

Diversification Opportunities for Greater Than and Litium AB

0.54

Correlation Coefficient

Greater Than  Litium AB

Very weak diversification

The 3 months correlation between Greater and Litium is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Greater Than AB and Litium AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litium AB and Greater Than 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 Greater Than AB are associated (or correlated) with Litium AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litium AB has no effect on the direction of Greater Than i.e., Greater Than and Litium AB go up and down completely randomly.

Pair Corralation between Greater Than and Litium AB

Assuming the 90 days trading horizon Greater Than is expected to generate 3.52 times less return on investment than Litium AB. In addition to that, Greater Than is 1.47 times more volatile than Litium AB. It trades about 0.02 of its total potential returns per unit of risk. Litium AB is currently generating about 0.09 per unit of volatility. If you would invest  754.00  in Litium AB on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Litium AB or generate 13.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Greater Than AB  vs.  Litium AB

Greater Than AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greater Than AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Greater Than is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Litium AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Litium AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Litium AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greater Than and Litium AB

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

The idea behind Greater Than AB and Litium AB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.