Correlation Between CLEANTECH LITH and Grupo Aeroportuario

Can any of the company-specific risk be diversified away by investing in both CLEANTECH LITH and Grupo Aeroportuario 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 CLEANTECH LITH and Grupo Aeroportuario into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CLEANTECH LITH LS and Grupo Aeroportuario del, you can compare the effects of market volatilities on CLEANTECH LITH and Grupo Aeroportuario 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 CLEANTECH LITH with a short position of Grupo Aeroportuario. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLEANTECH LITH and Grupo Aeroportuario.

Diversification Opportunities for CLEANTECH LITH and Grupo Aeroportuario

-0.52

Correlation Coefficient

CLEANTECH LITH  Grupo Aeroportuario

Excellent diversification

The 3 months correlation between CLEANTECH and Grupo is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CLEANTECH LITH LS and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del and CLEANTECH LITH 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 CLEANTECH LITH LS are associated (or correlated) with Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of CLEANTECH LITH i.e., CLEANTECH LITH and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between CLEANTECH LITH and Grupo Aeroportuario

Assuming the 90 days horizon CLEANTECH LITH LS is expected to generate 1.42 times more return on investment than Grupo Aeroportuario. However, CLEANTECH LITH is 1.42 times more volatile than Grupo Aeroportuario del. It trades about 0.19 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about 0.24 per unit of risk. If you would invest  19.00  in CLEANTECH LITH LS on September 15, 2024 and sell it today you would earn a total of  2.00  from holding CLEANTECH LITH LS or generate 10.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

CLEANTECH LITH LS  vs.  Grupo Aeroportuario del

CLEANTECH LITH LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLEANTECH LITH LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Grupo Aeroportuario del

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grupo Aeroportuario reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CLEANTECH LITH and Grupo Aeroportuario

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

The idea behind CLEANTECH LITH LS and Grupo Aeroportuario del 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..