Correlation Between American Lithium and ANDRADA MINING
Can any of the company-specific risk be diversified away by investing in both American Lithium and ANDRADA MINING 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 American Lithium and ANDRADA MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Lithium Corp and ANDRADA MINING LTD, you can compare the effects of market volatilities on American Lithium and ANDRADA MINING 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 American Lithium with a short position of ANDRADA MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and ANDRADA MINING.
Diversification Opportunities for American Lithium and ANDRADA MINING
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and ANDRADA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and ANDRADA MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANDRADA MINING LTD and American 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 American Lithium Corp are associated (or correlated) with ANDRADA MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANDRADA MINING LTD has no effect on the direction of American Lithium i.e., American Lithium and ANDRADA MINING go up and down completely randomly.
Pair Corralation between American Lithium and ANDRADA MINING
Assuming the 90 days trading horizon American Lithium Corp is expected to generate 1.51 times more return on investment than ANDRADA MINING. However, American Lithium is 1.51 times more volatile than ANDRADA MINING LTD. It trades about -0.01 of its potential returns per unit of risk. ANDRADA MINING LTD is currently generating about -0.04 per unit of risk. If you would invest 181.00 in American Lithium Corp on August 31, 2024 and sell it today you would lose (117.00) from holding American Lithium Corp or give up 64.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Lithium Corp vs. ANDRADA MINING LTD
Performance |
| Timeline |
| American Lithium Corp |
| ANDRADA MINING LTD |
American Lithium and ANDRADA MINING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and ANDRADA MINING
The main advantage of trading using opposite American Lithium and ANDRADA MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, ANDRADA MINING 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 ANDRADA MINING will offset losses from the drop in ANDRADA MINING's long position.The idea behind American Lithium Corp and ANDRADA MINING LTD 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.| ANDRADA MINING vs. Rio Tinto Group | ANDRADA MINING vs. Liontown Resources Limited | ANDRADA MINING vs. American Lithium Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |