Correlation Between METALL ZUG and Litigation Capital

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Can any of the company-specific risk be diversified away by investing in both METALL ZUG and Litigation Capital 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 METALL ZUG and Litigation Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METALL ZUG AG and Litigation Capital Management, you can compare the effects of market volatilities on METALL ZUG and Litigation Capital 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 METALL ZUG with a short position of Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of METALL ZUG and Litigation Capital.

Diversification Opportunities for METALL ZUG and Litigation Capital

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between METALL and Litigation is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding METALL ZUG AG and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital and METALL ZUG 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 METALL ZUG AG are associated (or correlated) with Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of METALL ZUG i.e., METALL ZUG and Litigation Capital go up and down completely randomly.

Pair Corralation between METALL ZUG and Litigation Capital

Assuming the 90 days trading horizon METALL ZUG AG is expected to generate 0.64 times more return on investment than Litigation Capital. However, METALL ZUG AG is 1.56 times less risky than Litigation Capital. It trades about -0.11 of its potential returns per unit of risk. Litigation Capital Management is currently generating about -0.09 per unit of risk. If you would invest  120,000  in METALL ZUG AG on September 21, 2024 and sell it today you would lose (5,500) from holding METALL ZUG AG or give up 4.58% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy90.91%
ValuesDaily Returns

METALL ZUG AG  vs.  Litigation Capital Management

 Performance 
       Timeline  
METALL ZUG AG 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Litigation Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Litigation Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

METALL ZUG and Litigation Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with METALL ZUG and Litigation Capital

The main advantage of trading using opposite METALL ZUG and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METALL ZUG position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.
The idea behind METALL ZUG AG and Litigation Capital Management 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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