Correlation Between American Lithium and Global Helium
Can any of the company-specific risk be diversified away by investing in both American Lithium and Global Helium 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 Global Helium 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 Global Helium Corp, you can compare the effects of market volatilities on American Lithium and Global Helium 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 Global Helium. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Global Helium.
Diversification Opportunities for American Lithium and Global Helium
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Global is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Global Helium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Helium 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 Global Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Helium Corp has no effect on the direction of American Lithium i.e., American Lithium and Global Helium go up and down completely randomly.
Pair Corralation between American Lithium and Global Helium
Given the investment horizon of 90 days American Lithium Corp is expected to under-perform the Global Helium. But the stock apears to be less risky and, when comparing its historical volatility, American Lithium Corp is 2.13 times less risky than Global Helium. The stock trades about -0.02 of its potential returns per unit of risk. The Global Helium Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Global Helium Corp on August 30, 2024 and sell it today you would lose (26.82) from holding Global Helium Corp or give up 89.4% 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. Global Helium Corp
Performance |
| Timeline |
| American Lithium Corp |
| Global Helium Corp |
American Lithium and Global Helium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and Global Helium
The main advantage of trading using opposite American Lithium and Global Helium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, Global Helium 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 Global Helium will offset losses from the drop in Global Helium's long position.| American Lithium vs. Lifevantage | American Lithium vs. Albertsons Companies | American Lithium vs. BBB Foods | American Lithium vs. Natural Alternatives International |
| Global Helium vs. Silver X Mining | Global Helium vs. Amarc Resources | Global Helium vs. Argosy Minerals Limited | Global Helium vs. Altura Mining 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Global Correlations Find global opportunities by holding instruments from different markets |