Correlation Between XPDB Old and L Catterton

Can any of the company-specific risk be diversified away by investing in both XPDB Old and L Catterton 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 XPDB Old and L Catterton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between XPDB Old and L Catterton Asia, you can compare the effects of market volatilities on XPDB Old and L Catterton 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 XPDB Old with a short position of L Catterton. Check out your portfolio center. Please also check ongoing floating volatility patterns of XPDB Old and L Catterton.

Diversification Opportunities for XPDB Old and L Catterton

0.69

Correlation Coefficient

XPDB Old  L Catterton

Poor diversification

The 3 months correlation between XPDB and LCAA is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding XPDB Old and L Catterton Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Catterton Asia and XPDB Old 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 XPDB Old are associated (or correlated) with L Catterton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Catterton Asia has no effect on the direction of XPDB Old i.e., XPDB Old and L Catterton go up and down completely randomly.

Pair Corralation between XPDB Old and L Catterton

If you would invest  1,050  in L Catterton Asia on October 27, 2024 and sell it today you would earn a total of  0.00  from holding L Catterton Asia or generate 0.0% return on investment over 90 days.

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

XPDB Old  vs.  L Catterton Asia

XPDB Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XPDB Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, XPDB Old is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

L Catterton Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L Catterton Asia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, L Catterton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with XPDB Old and L Catterton

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

The idea behind XPDB Old and L Catterton Asia 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.