Correlation Between LGSTW Old and Rose Hill

Can any of the company-specific risk be diversified away by investing in both LGSTW Old and Rose Hill 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 LGSTW Old and Rose Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LGSTW Old and Rose Hill Acquisition, you can compare the effects of market volatilities on LGSTW Old and Rose Hill 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 LGSTW Old with a short position of Rose Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGSTW Old and Rose Hill.

Diversification Opportunities for LGSTW Old and Rose Hill

0.28

Correlation Coefficient

LGSTW Old  Rose Hill

Modest diversification

The 3 months correlation between LGSTW and Rose is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding LGSTW Old and Rose Hill Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rose Hill Acquisition and LGSTW Old 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 LGSTW Old are associated (or correlated) with Rose Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rose Hill Acquisition has no effect on the direction of LGSTW Old i.e., LGSTW Old and Rose Hill go up and down completely randomly.

Pair Corralation between LGSTW Old and Rose Hill

If you would invest  3.38  in Rose Hill Acquisition on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Rose Hill Acquisition or generate 0.0% return on investment over 90 days.

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

LGSTW Old  vs.  Rose Hill Acquisition

LGSTW Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LGSTW Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, LGSTW Old is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Rose Hill Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rose Hill Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Rose Hill is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with LGSTW Old and Rose Hill

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

The idea behind LGSTW Old and Rose Hill Acquisition 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.