Correlation Between Life Time and Cleantech Power

Can any of the company-specific risk be diversified away by investing in both Life Time and Cleantech Power 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 Life Time and Cleantech Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Life Time Group and Cleantech Power Corp, you can compare the effects of market volatilities on Life Time and Cleantech Power 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 Life Time with a short position of Cleantech Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Cleantech Power.

Diversification Opportunities for Life Time and Cleantech Power

0.0

Correlation Coefficient

Life Time  Cleantech Power

Pay attention - limited upside

The 3 months correlation between Life and Cleantech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Cleantech Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleantech Power Corp and Life Time 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 Life Time Group are associated (or correlated) with Cleantech Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleantech Power Corp has no effect on the direction of Life Time i.e., Life Time and Cleantech Power go up and down completely randomly.

Pair Corralation between Life Time and Cleantech Power

Considering the 90-day investment horizon Life Time is expected to generate 32.8 times less return on investment than Cleantech Power. But when comparing it to its historical volatility, Life Time Group is 26.73 times less risky than Cleantech Power. It trades about 0.07 of its potential returns per unit of risk. Cleantech Power Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.34  in Cleantech Power Corp on September 21, 2024 and sell it today you would earn a total of  0.25  from holding Cleantech Power Corp or generate 73.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Life Time Group  vs.  Cleantech Power Corp

Life Time Group

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Life Time Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Cleantech Power Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Life Time and Cleantech Power

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

The idea behind Life Time Group and Cleantech Power Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.