Correlation Between Hudson Resources and Lithium Australia
Can any of the company-specific risk be diversified away by investing in both Hudson Resources 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 Hudson Resources and Lithium Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hudson Resources and Lithium Australia NL, you can compare the effects of market volatilities on Hudson Resources 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 Hudson Resources with a short position of Lithium Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Resources and Lithium Australia.
Diversification Opportunities for Hudson Resources and Lithium Australia
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hudson and Lithium is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hudson 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 Hudson 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 Hudson 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 Hudson Resources i.e., Hudson Resources and Lithium Australia go up and down completely randomly.
Pair Corralation between Hudson Resources and Lithium Australia
Assuming the 90 days horizon Hudson Resources is expected to generate 1.26 times more return on investment than Lithium Australia. However, Hudson Resources is 1.26 times more volatile than Lithium Australia NL. It trades about 0.22 of its potential returns per unit of risk. Lithium Australia NL is currently generating about 0.07 per unit of risk. If you would invest 1.00 in Hudson Resources on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Hudson Resources or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hudson Resources vs. Lithium Australia NL
Performance |
| Timeline |
| Hudson Resources |
| Lithium Australia |
Hudson Resources and Lithium Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hudson Resources and Lithium Australia
The main advantage of trading using opposite Hudson Resources and Lithium Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Resources 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.| Hudson Resources vs. Macmahon Holdings Limited | Hudson Resources vs. Rokmaster Resources Corp | Hudson Resources vs. Thunder Gold Corp | Hudson Resources vs. Prime Meridian Resources |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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