Correlation Between Liontown Resources and Champion Bear
Can any of the company-specific risk be diversified away by investing in both Liontown Resources and Champion Bear 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 Liontown Resources and Champion Bear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liontown Resources Limited and Champion Bear Resources, you can compare the effects of market volatilities on Liontown Resources and Champion Bear 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 Liontown Resources with a short position of Champion Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontown Resources and Champion Bear.
Diversification Opportunities for Liontown Resources and Champion Bear
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liontown and Champion is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources Limited and Champion Bear Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Bear Resources and Liontown 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 Liontown Resources Limited are associated (or correlated) with Champion Bear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Bear Resources has no effect on the direction of Liontown Resources i.e., Liontown Resources and Champion Bear go up and down completely randomly.
Pair Corralation between Liontown Resources and Champion Bear
Assuming the 90 days horizon Liontown Resources Limited is expected to under-perform the Champion Bear. But the pink sheet apears to be less risky and, when comparing its historical volatility, Liontown Resources Limited is 5.18 times less risky than Champion Bear. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Champion Bear Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Champion Bear Resources on September 2, 2024 and sell it today you would lose (11.00) from holding Champion Bear Resources or give up 73.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liontown Resources Limited vs. Champion Bear Resources
Performance |
| Timeline |
| Liontown Resources |
| Champion Bear Resources |
Liontown Resources and Champion Bear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liontown Resources and Champion Bear
The main advantage of trading using opposite Liontown Resources and Champion Bear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontown Resources position performs unexpectedly, Champion Bear 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 Champion Bear will offset losses from the drop in Champion Bear's long position.| Liontown Resources vs. Sayona Mining Limited | Liontown Resources vs. Core Lithium | Liontown Resources vs. Critical Elements | Liontown Resources vs. South32 ADR |
| Champion Bear vs. Aurelia Metals Limited | Champion Bear vs. Baroyeca Gold Silver | Champion Bear vs. Centaurus Metals Limited | Champion Bear vs. Edison Cobalt 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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