Correlation Between Core Lithium and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both Core Lithium and Macmahon Holdings 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 Macmahon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Lithium and Macmahon Holdings Limited, you can compare the effects of market volatilities on Core Lithium and Macmahon Holdings 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 Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Lithium and Macmahon Holdings.
Diversification Opportunities for Core Lithium and Macmahon Holdings
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Core and Macmahon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Core Lithium and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings 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 Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Core Lithium i.e., Core Lithium and Macmahon Holdings go up and down completely randomly.
Pair Corralation between Core Lithium and Macmahon Holdings
Assuming the 90 days horizon Core Lithium is expected to generate 2.88 times less return on investment than Macmahon Holdings. In addition to that, Core Lithium is 2.84 times more volatile than Macmahon Holdings Limited. It trades about 0.01 of its total potential returns per unit of risk. Macmahon Holdings Limited is currently generating about 0.11 per unit of volatility. If you would invest 12.00 in Macmahon Holdings Limited on August 25, 2024 and sell it today you would earn a total of 13.00 from holding Macmahon Holdings Limited or generate 108.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.9% |
| Values | Daily Returns |
Core Lithium vs. Macmahon Holdings Limited
Performance |
| Timeline |
| Core Lithium |
| Macmahon Holdings |
Core Lithium and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Lithium and Macmahon Holdings
The main advantage of trading using opposite Core Lithium and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Lithium position performs unexpectedly, Macmahon Holdings 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' 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 |
| Macmahon Holdings vs. Celsius Holdings | Macmahon Holdings vs. Diageo PLC ADR | Macmahon Holdings vs. Oatly Group AB | Macmahon Holdings vs. Shake Shack |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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