Correlation Between Huntsman Exploration and Lithium Corp
Can any of the company-specific risk be diversified away by investing in both Huntsman Exploration and Lithium Corp 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 Huntsman Exploration and Lithium Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntsman Exploration and Lithium Corp, you can compare the effects of market volatilities on Huntsman Exploration and Lithium Corp 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 Huntsman Exploration with a short position of Lithium Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntsman Exploration and Lithium Corp.
Diversification Opportunities for Huntsman Exploration and Lithium Corp
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huntsman and Lithium is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman Exploration and Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Corp and Huntsman Exploration 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 Huntsman Exploration are associated (or correlated) with Lithium Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Corp has no effect on the direction of Huntsman Exploration i.e., Huntsman Exploration and Lithium Corp go up and down completely randomly.
Pair Corralation between Huntsman Exploration and Lithium Corp
Assuming the 90 days horizon Huntsman Exploration is expected to under-perform the Lithium Corp. In addition to that, Huntsman Exploration is 1.77 times more volatile than Lithium Corp. It trades about -0.21 of its total potential returns per unit of risk. Lithium Corp is currently generating about 0.01 per unit of volatility. If you would invest 4.00 in Lithium Corp on August 29, 2024 and sell it today you would lose (0.17) from holding Lithium Corp or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntsman Exploration vs. Lithium Corp
Performance |
| Timeline |
| Huntsman Exploration |
| Lithium Corp |
Huntsman Exploration and Lithium Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntsman Exploration and Lithium Corp
The main advantage of trading using opposite Huntsman Exploration and Lithium Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntsman Exploration position performs unexpectedly, Lithium Corp 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 Lithium Corp will offset losses from the drop in Lithium Corp's long position.| Huntsman Exploration vs. Aurelia Metals Limited | Huntsman Exploration vs. Adriatic Metals PLC | Huntsman Exploration vs. American Helium | Huntsman Exploration vs. Progressive Planet Solutions |
| Lithium Corp vs. Altura Mining Limited | Lithium Corp vs. Frontier Lithium | Lithium Corp vs. Savannah Resources Plc | Lithium Corp vs. Lithium Ionic Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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