Correlation Between Litigation Capital and METALL ZUG

Can any of the company-specific risk be diversified away by investing in both Litigation Capital and METALL ZUG 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 Litigation Capital and METALL ZUG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Litigation Capital Management and METALL ZUG AG, you can compare the effects of market volatilities on Litigation Capital and METALL ZUG 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 Litigation Capital with a short position of METALL ZUG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and METALL ZUG.

Diversification Opportunities for Litigation Capital and METALL ZUG

0.12

Correlation Coefficient

Litigation Capital  METALL ZUG

Average diversification

The 3 months correlation between Litigation and METALL is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and METALL ZUG AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METALL ZUG AG and Litigation Capital 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 Litigation Capital Management are associated (or correlated) with METALL ZUG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METALL ZUG AG has no effect on the direction of Litigation Capital i.e., Litigation Capital and METALL ZUG go up and down completely randomly.

Pair Corralation between Litigation Capital and METALL ZUG

Assuming the 90 days trading horizon Litigation Capital Management is expected to under-perform the METALL ZUG. In addition to that, Litigation Capital is 1.71 times more volatile than METALL ZUG AG. It trades about -0.31 of its total potential returns per unit of risk. METALL ZUG AG is currently generating about 0.08 per unit of volatility. If you would invest  113,000  in METALL ZUG AG on September 25, 2024 and sell it today you would earn a total of  1,500  from holding METALL ZUG AG or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

Litigation Capital Management  vs.  METALL ZUG AG

Litigation Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Litigation Capital Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Litigation Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

METALL ZUG AG

Risk-Adjusted Performance

0 of 100

Very Weak

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.

Pair Trading with Litigation Capital and METALL ZUG

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

The idea behind Litigation Capital Management and METALL ZUG AG 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.