Correlation Between Advanced Lithium and STL Technology
Can any of the company-specific risk be diversified away by investing in both Advanced Lithium and STL Technology 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 Advanced Lithium and STL Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Lithium Electrochemistry and STL Technology Co, you can compare the effects of market volatilities on Advanced Lithium and STL Technology 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 Advanced Lithium with a short position of STL Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Lithium and STL Technology.
Diversification Opportunities for Advanced Lithium and STL Technology
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advanced and STL is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Lithium Electrochemis and STL Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STL Technology and Advanced Lithium 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 Advanced Lithium Electrochemistry are associated (or correlated) with STL Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STL Technology has no effect on the direction of Advanced Lithium i.e., Advanced Lithium and STL Technology go up and down completely randomly.
Pair Corralation between Advanced Lithium and STL Technology
Assuming the 90 days trading horizon Advanced Lithium Electrochemistry is expected to generate 27.33 times more return on investment than STL Technology. However, Advanced Lithium is 27.33 times more volatile than STL Technology Co. It trades about 0.08 of its potential returns per unit of risk. STL Technology Co is currently generating about 0.2 per unit of risk. If you would invest 4,840 in Advanced Lithium Electrochemistry on September 5, 2024 and sell it today you would lose (685.00) from holding Advanced Lithium Electrochemistry or give up 14.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Lithium Electrochemis vs. STL Technology Co
Performance |
| Timeline |
| Advanced Lithium Ele |
| STL Technology |
Advanced Lithium and STL Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Lithium and STL Technology
The main advantage of trading using opposite Advanced Lithium and STL Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Lithium position performs unexpectedly, STL Technology 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 STL Technology will offset losses from the drop in STL Technology's long position.| Advanced Lithium vs. Eclat Textile Co | Advanced Lithium vs. WiseChip Semiconductor | Advanced Lithium vs. Novatek Microelectronics Corp | Advanced Lithium vs. Leader Electronics |
| STL Technology vs. Eclat Textile Co | STL Technology vs. WiseChip Semiconductor | STL Technology vs. Novatek Microelectronics Corp | STL Technology vs. Leader Electronics |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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