Correlation Between Itaconix Plc and Costain Group

Can any of the company-specific risk be diversified away by investing in both Itaconix Plc and Costain 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 Itaconix Plc and Costain Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Itaconix plc and Costain Group PLC, you can compare the effects of market volatilities on Itaconix Plc and Costain 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 Itaconix Plc with a short position of Costain Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itaconix Plc and Costain Group.

Diversification Opportunities for Itaconix Plc and Costain Group

0.72

Correlation Coefficient

Itaconix Plc  Costain Group

Poor diversification

The 3 months correlation between Itaconix and Costain is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Itaconix plc and Costain Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costain Group PLC and Itaconix Plc 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 Itaconix plc are associated (or correlated) with Costain Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costain Group PLC has no effect on the direction of Itaconix Plc i.e., Itaconix Plc and Costain Group go up and down completely randomly.

Pair Corralation between Itaconix Plc and Costain Group

Assuming the 90 days trading horizon Itaconix Plc is expected to generate 1.25 times less return on investment than Costain Group. In addition to that, Itaconix Plc is 1.88 times more volatile than Costain Group PLC. It trades about 0.18 of its total potential returns per unit of risk. Costain Group PLC is currently generating about 0.41 per unit of volatility. If you would invest  10,560  in Costain Group PLC on April 23, 2025 and sell it today you would earn a total of  5,100  from holding Costain Group PLC or generate 48.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Itaconix plc  vs.  Costain Group PLC

Itaconix plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Itaconix plc 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, Itaconix Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Costain Group PLC

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Costain Group PLC are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Costain Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Itaconix Plc and Costain Group

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

The idea behind Itaconix plc and Costain Group PLC 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.