Correlation Between American Lithium and CLEANTECH LITH
Can any of the company-specific risk be diversified away by investing in both American Lithium and CLEANTECH LITH 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 CLEANTECH LITH 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 CLEANTECH LITH LS, you can compare the effects of market volatilities on American Lithium and CLEANTECH LITH 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 CLEANTECH LITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and CLEANTECH LITH.
Diversification Opportunities for American Lithium and CLEANTECH LITH
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and CLEANTECH is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and CLEANTECH LITH LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLEANTECH LITH LS 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 CLEANTECH LITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLEANTECH LITH LS has no effect on the direction of American Lithium i.e., American Lithium and CLEANTECH LITH go up and down completely randomly.
Pair Corralation between American Lithium and CLEANTECH LITH
Assuming the 90 days trading horizon American Lithium Corp is expected to under-perform the CLEANTECH LITH. In addition to that, American Lithium is 1.18 times more volatile than CLEANTECH LITH LS. It trades about -0.11 of its total potential returns per unit of risk. CLEANTECH LITH LS is currently generating about -0.04 per unit of volatility. If you would invest 19.00 in CLEANTECH LITH LS on November 3, 2024 and sell it today you would lose (1.00) from holding CLEANTECH LITH LS or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
American Lithium Corp vs. CLEANTECH LITH LS
Performance |
| Timeline |
| American Lithium Corp |
| CLEANTECH LITH LS |
American Lithium and CLEANTECH LITH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and CLEANTECH LITH
The main advantage of trading using opposite American Lithium and CLEANTECH LITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, CLEANTECH LITH 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 CLEANTECH LITH will offset losses from the drop in CLEANTECH LITH's long position.| American Lithium vs. Standard Lithium | American Lithium vs. BYD Company Limited | American Lithium vs. Rock Tech Lithium |
| CLEANTECH LITH vs. Rio Tinto Group | CLEANTECH LITH vs. Anglo American plc | CLEANTECH LITH vs. Mineral Resources Limited | CLEANTECH LITH vs. Liontown Resources Limited |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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