Correlation Between Core Lithium and Ascendant Resources
Can any of the company-specific risk be diversified away by investing in both Core Lithium and Ascendant Resources 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 Core Lithium and Ascendant Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Lithium and Ascendant Resources, you can compare the effects of market volatilities on Core Lithium and Ascendant Resources 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 Core Lithium with a short position of Ascendant Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Lithium and Ascendant Resources.
Diversification Opportunities for Core Lithium and Ascendant Resources
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Core and Ascendant is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Core Lithium and Ascendant Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendant Resources and Core 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 Core Lithium are associated (or correlated) with Ascendant Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendant Resources has no effect on the direction of Core Lithium i.e., Core Lithium and Ascendant Resources go up and down completely randomly.
Pair Corralation between Core Lithium and Ascendant Resources
Assuming the 90 days horizon Core Lithium is expected to under-perform the Ascendant Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Core Lithium is 1.52 times less risky than Ascendant Resources. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Ascendant Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Ascendant Resources on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Ascendant Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Lithium vs. Ascendant Resources
Performance |
| Timeline |
| Core Lithium |
| Ascendant Resources |
Core Lithium and Ascendant Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Lithium and Ascendant Resources
The main advantage of trading using opposite Core Lithium and Ascendant Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Lithium position performs unexpectedly, Ascendant Resources 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 Ascendant Resources will offset losses from the drop in Ascendant Resources' long position.| Core Lithium vs. ATT Inc | Core Lithium vs. Merck Company | Core Lithium vs. Walt Disney | Core Lithium vs. Caterpillar |
| Ascendant Resources vs. Edison Cobalt Corp | Ascendant Resources vs. Champion Bear Resources | Ascendant Resources vs. Avarone Metals | Ascendant Resources vs. Adriatic Metals PLC |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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