Correlation Between American Lithium and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both American Lithium and Aurelia 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 Aurelia 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 Aurelia Metals Limited, you can compare the effects of market volatilities on American Lithium and Aurelia 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 Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Aurelia Metals.
Diversification Opportunities for American Lithium and Aurelia Metals
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Aurelia is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Aurelia Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia 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 Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of American Lithium i.e., American Lithium and Aurelia Metals go up and down completely randomly.
Pair Corralation between American Lithium and Aurelia Metals
Assuming the 90 days horizon American Lithium Corp is expected to under-perform the Aurelia Metals. In addition to that, American Lithium is 1.46 times more volatile than Aurelia Metals Limited. It trades about 0.0 of its total potential returns per unit of risk. Aurelia Metals Limited is currently generating about 0.05 per unit of volatility. If you would invest 9.95 in Aurelia Metals Limited on September 3, 2024 and sell it today you would earn a total of 5.05 from holding Aurelia Metals Limited or generate 50.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 22.27% |
| Values | Daily Returns |
American Lithium Corp vs. Aurelia Metals Limited
Performance |
| Timeline |
| American Lithium Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Aurelia Metals |
American Lithium and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and Aurelia Metals
The main advantage of trading using opposite American Lithium and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, Aurelia 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.| American Lithium vs. American Lithium Corp | American Lithium vs. Frontier Lithium | American Lithium vs. Cypress Development Corp | American Lithium vs. Rock Tech Lithium |
| Aurelia Metals vs. Qubec Nickel Corp | Aurelia Metals vs. IGO Limited | Aurelia Metals vs. Avarone Metals | Aurelia 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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