Correlation Between Litigation Capital and Personal Group

Can any of the company-specific risk be diversified away by investing in both Litigation Capital and Personal Group 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 Personal Group 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 Personal Group Holdings, you can compare the effects of market volatilities on Litigation Capital and Personal Group 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 Personal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Personal Group.

Diversification Opportunities for Litigation Capital and Personal Group

0.85

Correlation Coefficient

Litigation Capital  Personal Group

Very poor diversification

The 3 months correlation between Litigation and Personal is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and Personal Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Personal Group Holdings 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 Personal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Personal Group Holdings has no effect on the direction of Litigation Capital i.e., Litigation Capital and Personal Group go up and down completely randomly.

Pair Corralation between Litigation Capital and Personal Group

Assuming the 90 days trading horizon Litigation Capital is expected to generate 4.21 times less return on investment than Personal Group. In addition to that, Litigation Capital is 1.12 times more volatile than Personal Group Holdings. It trades about 0.04 of its total potential returns per unit of risk. Personal Group Holdings is currently generating about 0.17 per unit of volatility. If you would invest  15,684  in Personal Group Holdings on September 16, 2024 and sell it today you would earn a total of  4,116  from holding Personal Group Holdings or generate 26.24% return on investment over 90 days.

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

Litigation Capital Management  vs.  Personal Group Holdings

Litigation Capital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Litigation Capital Management are ranked lower than 2 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Personal Group Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Personal Group Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Personal Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Litigation Capital and Personal Group

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

The idea behind Litigation Capital Management and Personal Group Holdings 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.