Correlation Between BAIYU Holdings and American Lithium
Can any of the company-specific risk be diversified away by investing in both BAIYU Holdings 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 BAIYU Holdings and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BAIYU Holdings and American Lithium Corp, you can compare the effects of market volatilities on BAIYU Holdings 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 BAIYU Holdings with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAIYU Holdings and American Lithium.
Diversification Opportunities for BAIYU Holdings and American Lithium
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BAIYU and American is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BAIYU Holdings 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 BAIYU Holdings 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 BAIYU Holdings 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 BAIYU Holdings i.e., BAIYU Holdings and American Lithium go up and down completely randomly.
Pair Corralation between BAIYU Holdings and American Lithium
Considering the 90-day investment horizon BAIYU Holdings is expected to under-perform the American Lithium. But the stock apears to be less risky and, when comparing its historical volatility, BAIYU Holdings is 1.0 times less risky than American Lithium. The stock trades about -0.26 of its potential returns per unit of risk. The American Lithium Corp is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 78.00 in American Lithium Corp on August 31, 2024 and sell it today you would lose (9.00) from holding American Lithium Corp or give up 11.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
BAIYU Holdings vs. American Lithium Corp
Performance |
| Timeline |
| BAIYU Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Lithium Corp |
BAIYU Holdings and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BAIYU Holdings and American Lithium
The main advantage of trading using opposite BAIYU Holdings and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAIYU Holdings 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.| BAIYU Holdings vs. Hudson Technologies | BAIYU Holdings vs. Finnair Oyj | BAIYU Holdings vs. Sable Offshore Corp | BAIYU Holdings vs. Drilling Tools International |
| American Lithium vs. Olympic Steel | American Lithium vs. Kaiser Aluminum | American Lithium vs. Diageo PLC ADR | American Lithium vs. Century Aluminum |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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