Correlation Between Raytech Holding and Lineage, Common

Can any of the company-specific risk be diversified away by investing in both Raytech Holding and Lineage, Common 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 Raytech Holding and Lineage, Common into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Raytech Holding Limited and Lineage, Common Stock, you can compare the effects of market volatilities on Raytech Holding and Lineage, Common 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 Raytech Holding with a short position of Lineage, Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytech Holding and Lineage, Common.

Diversification Opportunities for Raytech Holding and Lineage, Common

0.55

Correlation Coefficient

Raytech Holding  Lineage, Common

Very weak diversification

The 3 months correlation between Raytech and Lineage, is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Raytech Holding Limited and Lineage, Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lineage, Common Stock and Raytech Holding 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 Raytech Holding Limited are associated (or correlated) with Lineage, Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lineage, Common Stock has no effect on the direction of Raytech Holding i.e., Raytech Holding and Lineage, Common go up and down completely randomly.

Pair Corralation between Raytech Holding and Lineage, Common

Considering the 90-day investment horizon Raytech Holding Limited is expected to generate 3.22 times more return on investment than Lineage, Common. However, Raytech Holding is 3.22 times more volatile than Lineage, Common Stock. It trades about -0.05 of its potential returns per unit of risk. Lineage, Common Stock is currently generating about -0.29 per unit of risk. If you would invest  200.00  in Raytech Holding Limited on September 13, 2024 and sell it today you would lose (39.00) from holding Raytech Holding Limited or give up 19.5% of portfolio value over 90 days.

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

Raytech Holding Limited  vs.  Lineage, Common Stock

Raytech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytech Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lineage, Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lineage, Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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 Raytech Holding and Lineage, Common

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

The idea behind Raytech Holding Limited and Lineage, Common Stock 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.