Correlation Between Ardea Resources and Core Lithium
Can any of the company-specific risk be diversified away by investing in both Ardea Resources and Core Lithium 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 Ardea Resources and Core Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ardea Resources Limited and Core Lithium, you can compare the effects of market volatilities on Ardea Resources and Core Lithium 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 Ardea Resources with a short position of Core Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ardea Resources and Core Lithium.
Diversification Opportunities for Ardea Resources and Core Lithium
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ardea and Core is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ardea Resources Limited and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium and Ardea Resources 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 Ardea Resources Limited are associated (or correlated) with Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Ardea Resources i.e., Ardea Resources and Core Lithium go up and down completely randomly.
Pair Corralation between Ardea Resources and Core Lithium
Assuming the 90 days horizon Ardea Resources is expected to generate 2.32 times less return on investment than Core Lithium. But when comparing it to its historical volatility, Ardea Resources Limited is 2.03 times less risky than Core Lithium. It trades about 0.02 of its potential returns per unit of risk. Core Lithium is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Core Lithium on October 22, 2024 and sell it today you would lose (7.78) from holding Core Lithium or give up 59.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ardea Resources Limited vs. Core Lithium
Performance |
| Timeline |
| Ardea Resources |
| Core Lithium |
Ardea Resources and Core Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ardea Resources and Core Lithium
The main advantage of trading using opposite Ardea Resources and Core Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardea Resources position performs unexpectedly, Core Lithium 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 Core Lithium will offset losses from the drop in Core Lithium's long position.| Ardea Resources vs. Edison Cobalt Corp | Ardea Resources vs. Champion Bear Resources | Ardea Resources vs. Avarone Metals | Ardea Resources vs. Adriatic Metals PLC |
| Core Lithium vs. Macmahon Holdings Limited | Core Lithium vs. Prime Meridian Resources | Core Lithium vs. International Lithium Corp | Core Lithium vs. Hudson Resources |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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