Correlation Between Core Lithium and Lithium Power
Can any of the company-specific risk be diversified away by investing in both Core Lithium and Lithium Power 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 Lithium Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Lithium and Lithium Power International, you can compare the effects of market volatilities on Core Lithium and Lithium Power 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 Lithium Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Lithium and Lithium Power.
Diversification Opportunities for Core Lithium and Lithium Power
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Core and Lithium is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Core Lithium and Lithium Power International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Power Intern 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 Lithium Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Power Intern has no effect on the direction of Core Lithium i.e., Core Lithium and Lithium Power go up and down completely randomly.
Pair Corralation between Core Lithium and Lithium Power
If you would invest 6.51 in Core Lithium on August 28, 2024 and sell it today you would lose (0.01) from holding Core Lithium or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 1.59% |
| Values | Daily Returns |
Core Lithium vs. Lithium Power International
Performance |
| Timeline |
| Core Lithium |
| Lithium Power Intern |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Core Lithium and Lithium Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Lithium and Lithium Power
The main advantage of trading using opposite Core Lithium and Lithium Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Lithium position performs unexpectedly, Lithium Power 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 Power will offset losses from the drop in Lithium Power's long position.| Core Lithium vs. Macmahon Holdings Limited | Core Lithium vs. Prime Meridian Resources | Core Lithium vs. International Lithium Corp | Core Lithium vs. Hudson Resources |
| Lithium Power vs. Macmahon Holdings Limited | Lithium Power vs. Rokmaster Resources Corp | Lithium Power vs. Hudson Resources | Lithium Power vs. Thunder Gold Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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