Correlation Between Adriatic Metals and Core Lithium
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and Core Lithium 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 Adriatic Metals and Core Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adriatic Metals PLC and Core Lithium, you can compare the effects of market volatilities on Adriatic Metals and Core Lithium 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 Adriatic Metals with a short position of Core Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Core Lithium.
Diversification Opportunities for Adriatic Metals and Core Lithium
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adriatic and Core is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals PLC and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium and Adriatic Metals 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 Adriatic Metals PLC are associated (or correlated) with Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Core Lithium go up and down completely randomly.
Pair Corralation between Adriatic Metals and Core Lithium
Assuming the 90 days horizon Adriatic Metals is expected to generate 3.9 times less return on investment than Core Lithium. But when comparing it to its historical volatility, Adriatic Metals PLC is 3.19 times less risky than Core Lithium. It trades about 0.02 of its potential returns per unit of risk. Core Lithium is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9.06 in Core Lithium on September 3, 2024 and sell it today you would lose (2.89) from holding Core Lithium or give up 31.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Adriatic Metals PLC vs. Core Lithium
Performance |
| Timeline |
| Adriatic Metals PLC |
| Core Lithium |
Adriatic Metals and Core Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and Core Lithium
The main advantage of trading using opposite Adriatic Metals and Core Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, Core Lithium 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 Core Lithium will offset losses from the drop in Core Lithium's long position.| Adriatic Metals vs. Huntsman Exploration | Adriatic Metals vs. Aurelia Metals Limited | Adriatic Metals vs. American Helium | Adriatic Metals vs. Progressive Planet Solutions |
| Core Lithium vs. Qubec Nickel Corp | Core Lithium vs. IGO Limited | Core Lithium vs. Avarone Metals | Core Lithium vs. Adriatic Metals PLC |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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