Correlation Between ITM Power and HAYDALE GRAPHINDUSLS-02

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

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

Diversification Opportunities for ITM Power and HAYDALE GRAPHINDUSLS-02

0.1

Correlation Coefficient

ITM Power  HAYDALE GRAPHINDUSLS-02

Average diversification

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

Pair Corralation between ITM Power and HAYDALE GRAPHINDUSLS-02

Assuming the 90 days horizon ITM Power Plc is expected to under-perform the HAYDALE GRAPHINDUSLS-02. But the stock apears to be less risky and, when comparing its historical volatility, ITM Power Plc is 40.32 times less risky than HAYDALE GRAPHINDUSLS-02. The stock trades about -0.03 of its potential returns per unit of risk. The HAYDALE GRAPHINDUSLS 02 is currently generating about 0.22 of returns per unit of risk over similar time horizon. 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

ITM Power Plc  vs.  HAYDALE GRAPHINDUSLS 02

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.

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.

Pair Trading with ITM Power and HAYDALE GRAPHINDUSLS-02

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

The idea behind ITM Power Plc and HAYDALE GRAPHINDUSLS 02 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.