Correlation Between 10X Capital and L Catterton

Can any of the company-specific risk be diversified away by investing in both 10X Capital and L Catterton 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 10X Capital and L Catterton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 10X Capital Venture and L Catterton Asia, you can compare the effects of market volatilities on 10X Capital and L Catterton 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 10X Capital with a short position of L Catterton. Check out your portfolio center. Please also check ongoing floating volatility patterns of 10X Capital and L Catterton.

Diversification Opportunities for 10X Capital and L Catterton

0.32

Correlation Coefficient

10X Capital  L Catterton

Weak diversification

The 3 months correlation between 10X and LCAAW is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding 10X Capital Venture and L Catterton Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Catterton Asia and 10X 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 10X Capital Venture are associated (or correlated) with L Catterton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Catterton Asia has no effect on the direction of 10X Capital i.e., 10X Capital and L Catterton go up and down completely randomly.

Pair Corralation between 10X Capital and L Catterton

Assuming the 90 days horizon 10X Capital is expected to generate 21.68 times less return on investment than L Catterton. But when comparing it to its historical volatility, 10X Capital Venture is 10.37 times less risky than L Catterton. It trades about 0.06 of its potential returns per unit of risk. L Catterton Asia is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2.30  in L Catterton Asia on September 16, 2024 and sell it today you would earn a total of  46.70  from holding L Catterton Asia or generate 2030.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.94%
Values	Daily Returns

10X Capital Venture  vs.  L Catterton Asia

10X Capital Venture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 10X Capital Venture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, 10X Capital is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

L Catterton Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L Catterton Asia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, L Catterton is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with 10X Capital and L Catterton

The main advantage of trading using opposite 10X Capital and L Catterton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 10X Capital position performs unexpectedly, L Catterton 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 L Catterton will offset losses from the drop in L Catterton's long position.

The idea behind 10X Capital Venture and L Catterton Asia 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..