Correlation Between Aurelia Metals and American Lithium
Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and American 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 Aurelia Metals and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurelia Metals Limited and American Lithium Corp, you can compare the effects of market volatilities on Aurelia Metals and American 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 Aurelia Metals with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and American Lithium.
Diversification Opportunities for Aurelia Metals and American Lithium
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aurelia and American is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp and Aurelia Metals 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 Aurelia Metals Limited are associated (or correlated) with American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and American Lithium go up and down completely randomly.
Pair Corralation between Aurelia Metals and American Lithium
Assuming the 90 days horizon Aurelia Metals is expected to generate 1.77 times less return on investment than American Lithium. But when comparing it to its historical volatility, Aurelia Metals Limited is 1.62 times less risky than American Lithium. It trades about 0.05 of its potential returns per unit of risk. American Lithium Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 45.00 in American Lithium Corp on September 1, 2024 and sell it today you would lose (11.00) from holding American Lithium Corp or give up 24.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 23.39% |
| Values | Daily Returns |
Aurelia Metals Limited vs. American Lithium Corp
Performance |
| Timeline |
| Aurelia Metals |
| American Lithium Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aurelia Metals and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurelia Metals and American Lithium
The main advantage of trading using opposite Aurelia Metals and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, American 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 American Lithium will offset losses from the drop in American Lithium's long position.| Aurelia Metals vs. Champion Bear Resources | Aurelia Metals vs. Baroyeca Gold Silver | Aurelia Metals vs. Centaurus Metals Limited | Aurelia Metals vs. Edison Cobalt Corp |
| American Lithium vs. American Lithium Corp | American Lithium vs. Frontier Lithium | American Lithium vs. Cypress Development Corp | American Lithium vs. Rock Tech Lithium |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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