Correlation Between Associated British and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both Associated British and CleanTech Lithium 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 Associated British and CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and CleanTech Lithium plc, you can compare the effects of market volatilities on Associated British and CleanTech Lithium 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 Associated British with a short position of CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and CleanTech Lithium.
Diversification Opportunities for Associated British and CleanTech Lithium
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Associated and CleanTech is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc and Associated British 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 Associated British Foods are associated (or correlated) with CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Associated British i.e., Associated British and CleanTech Lithium go up and down completely randomly.
Pair Corralation between Associated British and CleanTech Lithium
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the CleanTech Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Associated British Foods is 1.28 times less risky than CleanTech Lithium. The stock trades about -0.03 of its potential returns per unit of risk. The CleanTech Lithium plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 520.00 in CleanTech Lithium plc on August 27, 2025 and sell it today you would earn a total of 55.00 from holding CleanTech Lithium plc or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. CleanTech Lithium plc
Performance |
| Timeline |
| Associated British Foods |
| CleanTech Lithium plc |
Associated British and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and CleanTech Lithium
The main advantage of trading using opposite Associated British and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium's long position.| Associated British vs. Qualcomm | Associated British vs. Weiss Korea Opportunity | Associated British vs. River and Mercantile | Associated British vs. Chrysalis Investments |
| CleanTech Lithium vs. Ebro Foods | CleanTech Lithium vs. Gamma Communications PLC | CleanTech Lithium vs. Charter Communications Cl | CleanTech Lithium vs. Tata Steel Limited |
Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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