Correlation Between Adriatic Metals and Lithium Corp
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and Lithium Corp 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 Lithium Corp 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 Lithium Corp, you can compare the effects of market volatilities on Adriatic Metals and Lithium Corp 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 Lithium Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Lithium Corp.
Diversification Opportunities for Adriatic Metals and Lithium Corp
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Adriatic and Lithium is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals PLC and Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Corp 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 Lithium Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Corp has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Lithium Corp go up and down completely randomly.
Pair Corralation between Adriatic Metals and Lithium Corp
Assuming the 90 days horizon Adriatic Metals PLC is expected to under-perform the Lithium Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Adriatic Metals PLC is 3.26 times less risky than Lithium Corp. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Lithium Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3.70 in Lithium Corp on September 3, 2024 and sell it today you would lose (0.40) from holding Lithium Corp or give up 10.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Adriatic Metals PLC vs. Lithium Corp
Performance |
| Timeline |
| Adriatic Metals PLC |
| Lithium Corp |
Adriatic Metals and Lithium Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and Lithium Corp
The main advantage of trading using opposite Adriatic Metals and Lithium Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, Lithium Corp 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 Lithium Corp will offset losses from the drop in Lithium Corp'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 |
| Lithium Corp vs. Qubec Nickel Corp | Lithium Corp vs. IGO Limited | Lithium Corp vs. Avarone Metals | Lithium Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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