Correlation Between American Lithium and Huntsman Exploration
Can any of the company-specific risk be diversified away by investing in both American Lithium and Huntsman Exploration 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 Huntsman Exploration 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 Huntsman Exploration, you can compare the effects of market volatilities on American Lithium and Huntsman Exploration 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 Huntsman Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Huntsman Exploration.
Diversification Opportunities for American Lithium and Huntsman Exploration
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Huntsman is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Huntsman Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntsman Exploration 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 Huntsman Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntsman Exploration has no effect on the direction of American Lithium i.e., American Lithium and Huntsman Exploration go up and down completely randomly.
Pair Corralation between American Lithium and Huntsman Exploration
Assuming the 90 days horizon American Lithium is expected to generate 1.92 times less return on investment than Huntsman Exploration. But when comparing it to its historical volatility, American Lithium Corp is 2.19 times less risky than Huntsman Exploration. It trades about 0.05 of its potential returns per unit of risk. Huntsman Exploration is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5.60 in Huntsman Exploration on August 26, 2024 and sell it today you would lose (1.90) from holding Huntsman Exploration or give up 33.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 10.15% |
| Values | Daily Returns |
American Lithium Corp vs. Huntsman Exploration
Performance |
| Timeline |
| American Lithium Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Huntsman Exploration |
American Lithium and Huntsman Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and Huntsman Exploration
The main advantage of trading using opposite American Lithium and Huntsman Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, Huntsman Exploration 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 Huntsman Exploration will offset losses from the drop in Huntsman Exploration's 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 |
| Huntsman Exploration vs. Norra Metals Corp | Huntsman Exploration vs. ZincX Resources Corp | Huntsman Exploration vs. Nuinsco Resources Limited | Huntsman Exploration vs. South Star Battery |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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