Correlation Between CIG PANNONIA and LI-METAL CORP
Can any of the company-specific risk be diversified away by investing in both CIG PANNONIA and LI-METAL CORP 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 CIG PANNONIA and LI-METAL CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIG PANNONIA LIFE and LI METAL P, you can compare the effects of market volatilities on CIG PANNONIA and LI-METAL CORP 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 CIG PANNONIA with a short position of LI-METAL CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIG PANNONIA and LI-METAL CORP.
Diversification Opportunities for CIG PANNONIA and LI-METAL CORP
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between CIG and LI-METAL is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CIG PANNONIA LIFE and LI METAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LI-METAL CORP and CIG PANNONIA 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 CIG PANNONIA LIFE are associated (or correlated) with LI-METAL CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LI-METAL CORP has no effect on the direction of CIG PANNONIA i.e., CIG PANNONIA and LI-METAL CORP go up and down completely randomly.
Pair Corralation between CIG PANNONIA and LI-METAL CORP
Assuming the 90 days trading horizon CIG PANNONIA is expected to generate 5.59 times less return on investment than LI-METAL CORP. But when comparing it to its historical volatility, CIG PANNONIA LIFE is 5.75 times less risky than LI-METAL CORP. It trades about 0.05 of its potential returns per unit of risk. LI METAL P is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15.00 in LI METAL P on December 13, 2024 and sell it today you would lose (11.90) from holding LI METAL P or give up 79.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
CIG PANNONIA LIFE vs. LI METAL P
Performance |
| Timeline |
| CIG PANNONIA LIFE |
| LI-METAL CORP |
CIG PANNONIA and LI-METAL CORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIG PANNONIA and LI-METAL CORP
The main advantage of trading using opposite CIG PANNONIA and LI-METAL CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIG PANNONIA position performs unexpectedly, LI-METAL CORP 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 LI-METAL CORP will offset losses from the drop in LI-METAL CORP's long position.| CIG PANNONIA vs. LI METAL P | ||
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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