Correlation Between Gedeon Richter and CleanTech Lithium

Can any of the company-specific risk be diversified away by investing in both Gedeon Richter and CleanTech Lithium 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 Gedeon Richter and CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Gedeon Richter and CleanTech Lithium

0.0

Correlation Coefficient

Gedeon Richter  CleanTech Lithium

Pay attention - limited upside

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

Pair Corralation between Gedeon Richter and CleanTech Lithium

If you would invest  1,750  in CleanTech Lithium plc on September 5, 2024 and sell it today you would earn a total of  100.00  from holding CleanTech Lithium plc or generate 5.71% return on investment over 90 days.

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

Gedeon Richter PLC  vs.  CleanTech Lithium plc

Gedeon Richter PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gedeon Richter PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gedeon Richter is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

CleanTech Lithium plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CleanTech Lithium plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Gedeon Richter and CleanTech Lithium

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

The idea behind Gedeon Richter PLC and CleanTech Lithium 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.