Correlation Between L Catterton and ST Energy

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

By analyzing existing cross correlation between L Catterton Asia and ST Energy Transition, you can compare the effects of market volatilities on L Catterton and ST Energy 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 L Catterton with a short position of ST Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Catterton and ST Energy.

Diversification Opportunities for L Catterton and ST Energy

0.97

Correlation Coefficient

L Catterton  ST Energy

Almost no diversification

The 3 months correlation between LCAA and STET is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding L Catterton Asia and ST Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Energy Transition and L Catterton 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 L Catterton Asia are associated (or correlated) with ST Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Energy Transition has no effect on the direction of L Catterton i.e., L Catterton and ST Energy go up and down completely randomly.

Pair Corralation between L Catterton and ST Energy

If you would invest  1,049  in ST Energy Transition on September 4, 2024 and sell it today you would earn a total of  0.00  from holding ST Energy Transition or generate 0.0% return on investment over 90 days.

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

L Catterton Asia  vs.  ST Energy Transition

L Catterton Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L Catterton Asia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, L Catterton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ST Energy Transition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ST Energy Transition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, ST Energy is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with L Catterton and ST Energy

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

The idea behind L Catterton Asia and ST Energy Transition 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.