Correlation Between American Lithium and Eskay Mining
Can any of the company-specific risk be diversified away by investing in both American Lithium and Eskay 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 Eskay 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 Eskay Mining Corp, you can compare the effects of market volatilities on American Lithium and Eskay 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 Eskay Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Eskay Mining.
Diversification Opportunities for American Lithium and Eskay Mining
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Eskay is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Eskay Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eskay Mining Corp 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 Eskay Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eskay Mining Corp has no effect on the direction of American Lithium i.e., American Lithium and Eskay Mining go up and down completely randomly.
Pair Corralation between American Lithium and Eskay Mining
Assuming the 90 days trading horizon American Lithium Corp is expected to generate 1.14 times more return on investment than Eskay Mining. However, American Lithium is 1.14 times more volatile than Eskay Mining Corp. It trades about 0.0 of its potential returns per unit of risk. Eskay Mining Corp is currently generating about -0.03 per unit of risk. If you would invest 52.00 in American Lithium Corp on September 19, 2024 and sell it today you would lose (18.00) from holding American Lithium Corp or give up 34.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Lithium Corp vs. Eskay Mining Corp
Performance |
| Timeline |
| American Lithium Corp |
| Eskay Mining Corp |
American Lithium and Eskay Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and Eskay Mining
The main advantage of trading using opposite American Lithium and Eskay Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, Eskay 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 Eskay Mining will offset losses from the drop in Eskay Mining's long position.| American Lithium vs. Standard Lithium | American Lithium vs. BYD Company Limited | American Lithium vs. Rock Tech Lithium |
| Eskay Mining vs. American Lithium Corp | Eskay Mining vs. ADRIATIC METALS LS 013355 | Eskay Mining vs. Superior Plus Corp | Eskay Mining vs. SIVERS SEMICONDUCTORS AB |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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