Correlation Between LiCycle Holdings and Ep Emerging

Can any of the company-specific risk be diversified away by investing in both LiCycle Holdings and Ep Emerging 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 LiCycle Holdings and Ep Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LiCycle Holdings Corp and Ep Emerging Markets, you can compare the effects of market volatilities on LiCycle Holdings and Ep Emerging 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 LiCycle Holdings with a short position of Ep Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiCycle Holdings and Ep Emerging.

Diversification Opportunities for LiCycle Holdings and Ep Emerging

0.25

Correlation Coefficient

LiCycle Holdings  Ep Emerging

Modest diversification

The 3 months correlation between LiCycle and EPASX is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and Ep Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ep Emerging Markets and LiCycle Holdings 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 LiCycle Holdings Corp are associated (or correlated) with Ep Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ep Emerging Markets has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and Ep Emerging go up and down completely randomly.

Pair Corralation between LiCycle Holdings and Ep Emerging

Given the investment horizon of 90 days LiCycle Holdings Corp is expected to generate 8.14 times more return on investment than Ep Emerging. However, LiCycle Holdings is 8.14 times more volatile than Ep Emerging Markets. It trades about 0.01 of its potential returns per unit of risk. Ep Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest  204.00  in LiCycle Holdings Corp on September 14, 2024 and sell it today you would lose (31.00) from holding LiCycle Holdings Corp or give up 15.2% of portfolio value over 90 days.

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

LiCycle Holdings Corp  vs.  Ep Emerging Markets

LiCycle Holdings Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days LiCycle Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, LiCycle Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ep Emerging Markets

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ep Emerging Markets are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ep Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LiCycle Holdings and Ep Emerging

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

The idea behind LiCycle Holdings Corp and Ep Emerging Markets 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.