Correlation Between Golden Goliath and Lithium Australia
Can any of the company-specific risk be diversified away by investing in both Golden Goliath and Lithium Australia 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 Golden Goliath and Lithium Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Goliath Resources and Lithium Australia NL, you can compare the effects of market volatilities on Golden Goliath and Lithium Australia 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 Golden Goliath with a short position of Lithium Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Goliath and Lithium Australia.
Diversification Opportunities for Golden Goliath and Lithium Australia
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Golden and Lithium is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Golden Goliath Resources and Lithium Australia NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Australia and Golden Goliath 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 Golden Goliath Resources are associated (or correlated) with Lithium Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Australia has no effect on the direction of Golden Goliath i.e., Golden Goliath and Lithium Australia go up and down completely randomly.
Pair Corralation between Golden Goliath and Lithium Australia
Assuming the 90 days horizon Golden Goliath Resources is expected to generate 2.75 times more return on investment than Lithium Australia. However, Golden Goliath is 2.75 times more volatile than Lithium Australia NL. It trades about 0.11 of its potential returns per unit of risk. Lithium Australia NL is currently generating about 0.01 per unit of risk. If you would invest 4.10 in Golden Goliath Resources on August 29, 2024 and sell it today you would lose (1.10) from holding Golden Goliath Resources or give up 26.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Golden Goliath Resources vs. Lithium Australia NL
Performance |
| Timeline |
| Golden Goliath Resources |
| Lithium Australia |
Golden Goliath and Lithium Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Goliath and Lithium Australia
The main advantage of trading using opposite Golden Goliath and Lithium Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Goliath position performs unexpectedly, Lithium Australia 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 Australia will offset losses from the drop in Lithium Australia's long position.| Golden Goliath vs. Rockridge Resources | Golden Goliath vs. Ameriwest Lithium | Golden Goliath vs. Osisko Metals Incorporated | Golden Goliath vs. Volt Lithium Corp |
| Lithium Australia vs. Grid Metals Corp | Lithium Australia vs. Latin Metals | Lithium Australia vs. First American Silver | Lithium Australia vs. IGO Limited |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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