Correlation Between American Lithium and Ascendant Resources
Can any of the company-specific risk be diversified away by investing in both American Lithium and Ascendant Resources 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 Ascendant Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Lithium Minerals and Ascendant Resources, you can compare the effects of market volatilities on American Lithium and Ascendant Resources 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 Ascendant Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Ascendant Resources.
Diversification Opportunities for American Lithium and Ascendant Resources
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Ascendant is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Minerals and Ascendant Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendant Resources 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 Minerals are associated (or correlated) with Ascendant Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendant Resources has no effect on the direction of American Lithium i.e., American Lithium and Ascendant Resources go up and down completely randomly.
Pair Corralation between American Lithium and Ascendant Resources
Given the investment horizon of 90 days American Lithium Minerals is expected to under-perform the Ascendant Resources. In addition to that, American Lithium is 1.16 times more volatile than Ascendant Resources. It trades about -0.06 of its total potential returns per unit of risk. Ascendant Resources is currently generating about 0.06 per unit of volatility. If you would invest 3.00 in Ascendant Resources on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Ascendant Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Lithium Minerals vs. Ascendant Resources
Performance |
| Timeline |
| American Lithium Minerals |
| Ascendant Resources |
American Lithium and Ascendant Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and Ascendant Resources
The main advantage of trading using opposite American Lithium and Ascendant Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, Ascendant Resources 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 Ascendant Resources will offset losses from the drop in Ascendant Resources' long position.| American Lithium vs. Applied Minerals | American Lithium vs. Artemis Resources | American Lithium vs. St Georges Eco Mining Corp | American Lithium vs. Atco Mining |
| Ascendant Resources vs. Edison Cobalt Corp | Ascendant Resources vs. Champion Bear Resources | Ascendant Resources vs. Avarone Metals | Ascendant Resources 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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