Correlation Between Lion Copper and Lake Resources
Can any of the company-specific risk be diversified away by investing in both Lion Copper and Lake 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 Lion Copper and Lake Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Copper and and Lake Resources NL, you can compare the effects of market volatilities on Lion Copper and Lake 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 Lion Copper with a short position of Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Copper and Lake Resources.
Diversification Opportunities for Lion Copper and Lake Resources
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lion and Lake is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lion Copper and and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL and Lion Copper 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 Lion Copper and are associated (or correlated) with Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Lion Copper i.e., Lion Copper and Lake Resources go up and down completely randomly.
Pair Corralation between Lion Copper and Lake Resources
Assuming the 90 days horizon Lion Copper and is expected to generate 1.25 times more return on investment than Lake Resources. However, Lion Copper is 1.25 times more volatile than Lake Resources NL. It trades about 0.14 of its potential returns per unit of risk. Lake Resources NL is currently generating about 0.01 per unit of risk. If you would invest 5.00 in Lion Copper and on December 1, 2024 and sell it today you would earn a total of 1.00 from holding Lion Copper and or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Copper and vs. Lake Resources NL
Performance |
| Timeline |
| Lion Copper |
| Lake Resources NL |
Lion Copper and Lake Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Copper and Lake Resources
The main advantage of trading using opposite Lion Copper and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Copper position performs unexpectedly, Lake 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 Lake Resources will offset losses from the drop in Lake Resources' long position.| Lion Copper vs. Pampa Metals | Lion Copper vs. Progressive Planet Solutions | Lion Copper vs. Searchlight Resources | Lion Copper vs. Durango Resources |
| Lake Resources vs. Albertsons Companies | Lake Resources vs. Smithfield Foods, Common | Lake Resources vs. NL Industries | Lake Resources vs. CF Industries Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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