Correlation Between Rockwood Realisation and Lendinvest PLC

Can any of the company-specific risk be diversified away by investing in both Rockwood Realisation and Lendinvest PLC 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 Rockwood Realisation and Lendinvest PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rockwood Realisation PLC and Lendinvest PLC, you can compare the effects of market volatilities on Rockwood Realisation and Lendinvest PLC 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 Rockwood Realisation with a short position of Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwood Realisation and Lendinvest PLC.

Diversification Opportunities for Rockwood Realisation and Lendinvest PLC

-0.75

Correlation Coefficient

Rockwood Realisation  Lendinvest PLC

Pay attention - limited upside

The 3 months correlation between Rockwood and Lendinvest is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Rockwood Realisation PLC and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest PLC and Rockwood Realisation 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 Rockwood Realisation PLC are associated (or correlated) with Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of Rockwood Realisation i.e., Rockwood Realisation and Lendinvest PLC go up and down completely randomly.

Pair Corralation between Rockwood Realisation and Lendinvest PLC

Assuming the 90 days trading horizon Rockwood Realisation PLC is expected to generate 0.35 times more return on investment than Lendinvest PLC. However, Rockwood Realisation PLC is 2.9 times less risky than Lendinvest PLC. It trades about 0.05 of its potential returns per unit of risk. Lendinvest PLC is currently generating about -0.1 per unit of risk. If you would invest  26,050  in Rockwood Realisation PLC on October 6, 2024 and sell it today you would earn a total of  250.00  from holding Rockwood Realisation PLC or generate 0.96% return on investment over 90 days.

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

Rockwood Realisation PLC  vs.  Lendinvest PLC

Rockwood Realisation PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rockwood Realisation PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Rockwood Realisation is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Lendinvest PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lendinvest PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Rockwood Realisation and Lendinvest PLC

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

The idea behind Rockwood Realisation PLC and Lendinvest PLC 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.