Correlation Between Imperial Brands and Ladybug Resource

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

By analyzing existing cross correlation between Imperial Brands PLC and Ladybug Resource Group, you can compare the effects of market volatilities on Imperial Brands and Ladybug Resource 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 Imperial Brands with a short position of Ladybug Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Brands and Ladybug Resource.

Diversification Opportunities for Imperial Brands and Ladybug Resource

-0.91

Correlation Coefficient

Imperial Brands  Ladybug Resource

Pay attention - limited upside

The 3 months correlation between Imperial and Ladybug is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Brands PLC and Ladybug Resource Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladybug Resource and Imperial Brands 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 Imperial Brands PLC are associated (or correlated) with Ladybug Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladybug Resource has no effect on the direction of Imperial Brands i.e., Imperial Brands and Ladybug Resource go up and down completely randomly.

Pair Corralation between Imperial Brands and Ladybug Resource

Assuming the 90 days horizon Imperial Brands PLC is expected to under-perform the Ladybug Resource. But the otc stock apears to be less risky and, when comparing its historical volatility, Imperial Brands PLC is 30.18 times less risky than Ladybug Resource. The otc stock trades about -0.09 of its potential returns per unit of risk. The Ladybug Resource Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.65  in Ladybug Resource Group on September 29, 2024 and sell it today you would earn a total of  0.05  from holding Ladybug Resource Group or generate 7.69% return on investment over 90 days.

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

Imperial Brands PLC  vs.  Ladybug Resource Group

Imperial Brands PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Brands PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental drivers, Imperial Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Ladybug Resource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ladybug Resource Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ladybug Resource is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Imperial Brands and Ladybug Resource

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

The idea behind Imperial Brands PLC and Ladybug Resource Group 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.