Correlation Between BAIYU Holdings and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both BAIYU Holdings and Lithium Americas 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 Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BAIYU Holdings and Lithium Americas Corp, you can compare the effects of market volatilities on BAIYU Holdings and Lithium Americas 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 Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAIYU Holdings and Lithium Americas.
Diversification Opportunities for BAIYU Holdings and Lithium Americas
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BAIYU and Lithium is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BAIYU Holdings and Lithium Americas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Americas 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 Lithium Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Americas Corp has no effect on the direction of BAIYU Holdings i.e., BAIYU Holdings and Lithium Americas go up and down completely randomly.
Pair Corralation between BAIYU Holdings and Lithium Americas
Considering the 90-day investment horizon BAIYU Holdings is expected to under-perform the Lithium Americas. In addition to that, BAIYU Holdings is 1.6 times more volatile than Lithium Americas Corp. It trades about -0.31 of its total potential returns per unit of risk. Lithium Americas Corp is currently generating about 0.2 per unit of volatility. If you would invest 241.00 in Lithium Americas Corp on August 26, 2024 and sell it today you would earn a total of 156.00 from holding Lithium Americas Corp or generate 64.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
BAIYU Holdings vs. Lithium Americas Corp
Performance |
| Timeline |
| BAIYU Holdings |
| Lithium Americas Corp |
BAIYU Holdings and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BAIYU Holdings and Lithium Americas
The main advantage of trading using opposite BAIYU Holdings and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAIYU Holdings position performs unexpectedly, Lithium Americas 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 Americas will offset losses from the drop in Lithium Americas' long position.| BAIYU Holdings vs. Arrow Electronics | BAIYU Holdings vs. BioNTech SE | BAIYU Holdings vs. Alvotech | BAIYU Holdings vs. ServiceNow |
| Lithium Americas vs. Vale SA ADR | Lithium Americas vs. Teck Resources Ltd | Lithium Americas vs. MP Materials Corp | Lithium Americas vs. BHP Group Limited |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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