Correlation Between BAIYU Holdings and Sigma Lithium
Can any of the company-specific risk be diversified away by investing in both BAIYU Holdings and Sigma 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 Sigma 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 Sigma Lithium Resources, you can compare the effects of market volatilities on BAIYU Holdings and Sigma 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 Sigma Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAIYU Holdings and Sigma Lithium.
Diversification Opportunities for BAIYU Holdings and Sigma Lithium
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BAIYU and Sigma is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding BAIYU Holdings and Sigma Lithium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigma Lithium Resources 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 Sigma Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigma Lithium Resources has no effect on the direction of BAIYU Holdings i.e., BAIYU Holdings and Sigma Lithium go up and down completely randomly.
Pair Corralation between BAIYU Holdings and Sigma Lithium
Considering the 90-day investment horizon BAIYU Holdings is expected to under-perform the Sigma Lithium. In addition to that, BAIYU Holdings is 3.03 times more volatile than Sigma Lithium Resources. It trades about -0.05 of its total potential returns per unit of risk. Sigma Lithium Resources is currently generating about 0.0 per unit of volatility. If you would invest 1,487 in Sigma Lithium Resources on August 30, 2024 and sell it today you would lose (98.00) from holding Sigma Lithium Resources or give up 6.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.03% |
| Values | Daily Returns |
BAIYU Holdings vs. Sigma Lithium Resources
Performance |
| Timeline |
| BAIYU Holdings |
| Sigma Lithium Resources |
BAIYU Holdings and Sigma Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BAIYU Holdings and Sigma Lithium
The main advantage of trading using opposite BAIYU Holdings and Sigma Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAIYU Holdings position performs unexpectedly, Sigma 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 Sigma Lithium will offset losses from the drop in Sigma Lithium's long position.| BAIYU Holdings vs. Western Digital | BAIYU Holdings vs. Viemed Healthcare | BAIYU Holdings vs. Meiwu Technology Co | BAIYU Holdings vs. Centessa Pharmaceuticals PLC |
| Sigma Lithium vs. Piedmont Lithium Ltd | Sigma Lithium vs. Standard Lithium | Sigma Lithium vs. MP Materials Corp | Sigma Lithium vs. Vale SA ADR |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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