Correlation Between LiCycle Holdings and SPACE

Can any of the company-specific risk be diversified away by investing in both LiCycle Holdings and SPACE 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 SPACE 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 SPACE, you can compare the effects of market volatilities on LiCycle Holdings and SPACE 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 SPACE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiCycle Holdings and SPACE.

Diversification Opportunities for LiCycle Holdings and SPACE

0.47

Correlation Coefficient

LiCycle Holdings  SPACE

Very weak diversification

The 3 months correlation between LiCycle and SPACE is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and SPACE go up and down completely randomly.

Pair Corralation between LiCycle Holdings and SPACE

Given the investment horizon of 90 days LiCycle Holdings Corp is expected to generate 2.01 times more return on investment than SPACE. However, LiCycle Holdings is 2.01 times more volatile than SPACE. It trades about 0.12 of its potential returns per unit of risk. SPACE is currently generating about 0.2 per unit of risk. If you would invest  138.00  in LiCycle Holdings Corp on August 30, 2024 and sell it today you would earn a total of  79.00  from holding LiCycle Holdings Corp or generate 57.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

LiCycle Holdings Corp  vs.  SPACE

LiCycle Holdings Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LiCycle Holdings Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, LiCycle Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

SPACE

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPACE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SPACE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LiCycle Holdings and SPACE

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

The idea behind LiCycle Holdings Corp and SPACE 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.