Correlation Between CleanTech Lithium and Eastinco Mining
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium and Eastinco Mining 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 CleanTech Lithium and Eastinco Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CleanTech Lithium plc and Eastinco Mining Exploration, you can compare the effects of market volatilities on CleanTech Lithium and Eastinco Mining 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 CleanTech Lithium with a short position of Eastinco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Eastinco Mining.
Diversification Opportunities for CleanTech Lithium and Eastinco Mining
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CleanTech and Eastinco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Eastinco Mining Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastinco Mining Expl and CleanTech 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 CleanTech Lithium plc are associated (or correlated) with Eastinco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastinco Mining Expl has no effect on the direction of CleanTech Lithium i.e., CleanTech Lithium and Eastinco Mining go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Eastinco Mining
Assuming the 90 days trading horizon CleanTech Lithium is expected to generate 1.31 times less return on investment than Eastinco Mining. In addition to that, CleanTech Lithium is 1.72 times more volatile than Eastinco Mining Exploration. It trades about 0.02 of its total potential returns per unit of risk. Eastinco Mining Exploration is currently generating about 0.04 per unit of volatility. If you would invest 4,900 in Eastinco Mining Exploration on September 18, 2024 and sell it today you would earn a total of 50.00 from holding Eastinco Mining Exploration or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Eastinco Mining Exploration
Performance |
| Timeline |
| CleanTech Lithium plc |
| Eastinco Mining Expl |
CleanTech Lithium and Eastinco Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Eastinco Mining
The main advantage of trading using opposite CleanTech Lithium and Eastinco Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium position performs unexpectedly, Eastinco Mining 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 Eastinco Mining will offset losses from the drop in Eastinco Mining's long position.| CleanTech Lithium vs. Givaudan SA | CleanTech Lithium vs. Antofagasta PLC | CleanTech Lithium vs. Ferrexpo PLC | CleanTech Lithium vs. Atalaya Mining |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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