Correlation Between Arizona Lithium and Argosy Minerals
Can any of the company-specific risk be diversified away by investing in both Arizona Lithium and Argosy Minerals 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 Arizona Lithium and Argosy Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arizona Lithium Limited and Argosy Minerals Limited, you can compare the effects of market volatilities on Arizona Lithium and Argosy Minerals 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 Arizona Lithium with a short position of Argosy Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Lithium and Argosy Minerals.
Diversification Opportunities for Arizona Lithium and Argosy Minerals
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arizona and Argosy is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Lithium Limited and Argosy Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argosy Minerals and Arizona 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 Arizona Lithium Limited are associated (or correlated) with Argosy Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argosy Minerals has no effect on the direction of Arizona Lithium i.e., Arizona Lithium and Argosy Minerals go up and down completely randomly.
Pair Corralation between Arizona Lithium and Argosy Minerals
Assuming the 90 days horizon Arizona Lithium Limited is expected to generate 1.68 times more return on investment than Argosy Minerals. However, Arizona Lithium is 1.68 times more volatile than Argosy Minerals Limited. It trades about 0.04 of its potential returns per unit of risk. Argosy Minerals Limited is currently generating about -0.06 per unit of risk. If you would invest 1.84 in Arizona Lithium Limited on August 25, 2024 and sell it today you would lose (0.89) from holding Arizona Lithium Limited or give up 48.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Arizona Lithium Limited vs. Argosy Minerals Limited
Performance |
| Timeline |
| Arizona Lithium |
| Argosy Minerals |
Arizona Lithium and Argosy Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arizona Lithium and Argosy Minerals
The main advantage of trading using opposite Arizona Lithium and Argosy Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arizona Lithium position performs unexpectedly, Argosy Minerals 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 Argosy Minerals will offset losses from the drop in Argosy Minerals' long position.| Arizona Lithium vs. Norra Metals Corp | Arizona Lithium vs. ZincX Resources Corp | Arizona Lithium vs. Nuinsco Resources Limited | Arizona Lithium vs. South Star Battery |
| Argosy Minerals vs. Norra Metals Corp | Argosy Minerals vs. ZincX Resources Corp | Argosy Minerals vs. Nuinsco Resources Limited | Argosy Minerals 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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