Correlation Between American Lithium and Pampa Metals
Can any of the company-specific risk be diversified away by investing in both American Lithium and Pampa Metals 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 Pampa Metals 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 Pampa Metals, you can compare the effects of market volatilities on American Lithium and Pampa Metals 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 Pampa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Pampa Metals.
Diversification Opportunities for American Lithium and Pampa Metals
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Pampa is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Pampa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Metals 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 Pampa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Metals has no effect on the direction of American Lithium i.e., American Lithium and Pampa Metals go up and down completely randomly.
Pair Corralation between American Lithium and Pampa Metals
Given the investment horizon of 90 days American Lithium Corp is expected to generate 1.16 times more return on investment than Pampa Metals. However, American Lithium is 1.16 times more volatile than Pampa Metals. It trades about 0.14 of its potential returns per unit of risk. Pampa Metals is currently generating about 0.0 per unit of risk. If you would invest 39.00 in American Lithium Corp on September 4, 2024 and sell it today you would earn a total of 28.00 from holding American Lithium Corp or generate 71.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Lithium Corp vs. Pampa Metals
Performance |
| Timeline |
| American Lithium Corp |
| Pampa Metals |
American Lithium and Pampa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and Pampa Metals
The main advantage of trading using opposite American Lithium and Pampa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, Pampa Metals 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 Pampa Metals will offset losses from the drop in Pampa Metals' long position.| American Lithium vs. Cedar Realty Trust | American Lithium vs. NETGEAR | American Lithium vs. Uber Technologies | American Lithium vs. The Gap, |
| Pampa Metals vs. Qubec Nickel Corp | Pampa Metals vs. IGO Limited | Pampa Metals vs. Avarone Metals | Pampa Metals 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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