Correlation Between Eskay Mining and American Lithium
Can any of the company-specific risk be diversified away by investing in both Eskay Mining and American Lithium 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 Eskay Mining and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eskay Mining Corp and American Lithium Corp, you can compare the effects of market volatilities on Eskay Mining and American Lithium 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 Eskay Mining with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eskay Mining and American Lithium.
Diversification Opportunities for Eskay Mining and American Lithium
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eskay and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp and Eskay Mining 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 Eskay Mining Corp are associated (or correlated) with American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Eskay Mining i.e., Eskay Mining and American Lithium go up and down completely randomly.
Pair Corralation between Eskay Mining and American Lithium
Assuming the 90 days horizon Eskay Mining Corp is expected to generate 1.2 times more return on investment than American Lithium. However, Eskay Mining is 1.2 times more volatile than American Lithium Corp. It trades about 0.17 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.33 per unit of risk. If you would invest 9.10 in Eskay Mining Corp on September 19, 2024 and sell it today you would earn a total of 2.90 from holding Eskay Mining Corp or generate 31.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eskay Mining Corp vs. American Lithium Corp
Performance |
| Timeline |
| Eskay Mining Corp |
| American Lithium Corp |
Eskay Mining and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eskay Mining and American Lithium
The main advantage of trading using opposite Eskay Mining and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eskay Mining position performs unexpectedly, American Lithium 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 American Lithium will offset losses from the drop in American Lithium's long position.| Eskay Mining vs. American Lithium Corp | Eskay Mining vs. ADRIATIC METALS LS 013355 | Eskay Mining vs. Superior Plus Corp | Eskay Mining vs. SIVERS SEMICONDUCTORS AB |
| American Lithium vs. Standard Lithium | American Lithium vs. BYD Company Limited | American Lithium vs. Rock Tech Lithium |
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 Stocks Directory module to find actively traded stocks across global markets.
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