Correlation Between Decade Resources and Lithium Corp
Can any of the company-specific risk be diversified away by investing in both Decade Resources and Lithium Corp 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 Decade Resources and Lithium Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Decade Resources and Lithium Corp, you can compare the effects of market volatilities on Decade Resources and Lithium Corp 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 Decade Resources with a short position of Lithium Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Decade Resources and Lithium Corp.
Diversification Opportunities for Decade Resources and Lithium Corp
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Decade and Lithium is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Decade Resources and Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Corp and Decade Resources 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 Decade Resources are associated (or correlated) with Lithium Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Corp has no effect on the direction of Decade Resources i.e., Decade Resources and Lithium Corp go up and down completely randomly.
Pair Corralation between Decade Resources and Lithium Corp
Assuming the 90 days horizon Decade Resources is expected to generate 2.32 times more return on investment than Lithium Corp. However, Decade Resources is 2.32 times more volatile than Lithium Corp. It trades about 0.05 of its potential returns per unit of risk. Lithium Corp is currently generating about 0.01 per unit of risk. If you would invest 5.46 in Decade Resources on September 1, 2024 and sell it today you would lose (2.36) from holding Decade Resources or give up 43.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Decade Resources vs. Lithium Corp
Performance |
| Timeline |
| Decade Resources |
| Lithium Corp |
Decade Resources and Lithium Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Decade Resources and Lithium Corp
The main advantage of trading using opposite Decade Resources and Lithium Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Decade Resources position performs unexpectedly, Lithium Corp 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 Corp will offset losses from the drop in Lithium Corp's long position.| Decade Resources vs. First American Silver | Decade Resources vs. Australian Vanadium Limited | Decade Resources vs. International Lithium Corp | Decade Resources vs. Wealth Minerals |
| Lithium Corp vs. Altura Mining Limited | Lithium Corp vs. Frontier Lithium | Lithium Corp vs. Savannah Resources Plc | Lithium Corp vs. Lithium Ionic 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |