Correlation Between Ceylon Graphite and Liontown Resources
Can any of the company-specific risk be diversified away by investing in both Ceylon Graphite and Liontown 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 Ceylon Graphite and Liontown Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ceylon Graphite Corp and Liontown Resources Limited, you can compare the effects of market volatilities on Ceylon Graphite and Liontown 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 Ceylon Graphite with a short position of Liontown Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceylon Graphite and Liontown Resources.
Diversification Opportunities for Ceylon Graphite and Liontown Resources
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ceylon and Liontown is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ceylon Graphite Corp and Liontown Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontown Resources and Ceylon Graphite 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 Ceylon Graphite Corp are associated (or correlated) with Liontown Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontown Resources has no effect on the direction of Ceylon Graphite i.e., Ceylon Graphite and Liontown Resources go up and down completely randomly.
Pair Corralation between Ceylon Graphite and Liontown Resources
Assuming the 90 days horizon Ceylon Graphite Corp is expected to under-perform the Liontown Resources. In addition to that, Ceylon Graphite is 1.74 times more volatile than Liontown Resources Limited. It trades about -0.01 of its total potential returns per unit of risk. Liontown Resources Limited is currently generating about 0.07 per unit of volatility. If you would invest 44.00 in Liontown Resources Limited on September 2, 2024 and sell it today you would earn a total of 7.00 from holding Liontown Resources Limited or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Ceylon Graphite Corp vs. Liontown Resources Limited
Performance |
| Timeline |
| Ceylon Graphite Corp |
| Liontown Resources |
Ceylon Graphite and Liontown Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceylon Graphite and Liontown Resources
The main advantage of trading using opposite Ceylon Graphite and Liontown Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceylon Graphite position performs unexpectedly, Liontown 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 Liontown Resources will offset losses from the drop in Liontown Resources' long position.| Ceylon Graphite vs. Argent Minerals Limited | Ceylon Graphite vs. Edison Cobalt Corp | Ceylon Graphite vs. Champion Bear Resources | Ceylon Graphite vs. Ascendant Resources |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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