Correlation Between Liontown Resources and Golden Goliath
Can any of the company-specific risk be diversified away by investing in both Liontown Resources and Golden Goliath 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 Golden Goliath 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 Golden Goliath Resources, you can compare the effects of market volatilities on Liontown Resources and Golden Goliath 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 Golden Goliath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontown Resources and Golden Goliath.
Diversification Opportunities for Liontown Resources and Golden Goliath
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Liontown and Golden is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources Limited and Golden Goliath Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Goliath 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 Golden Goliath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Goliath Resources has no effect on the direction of Liontown Resources i.e., Liontown Resources and Golden Goliath go up and down completely randomly.
Pair Corralation between Liontown Resources and Golden Goliath
Assuming the 90 days horizon Liontown Resources Limited is expected to under-perform the Golden Goliath. But the pink sheet apears to be less risky and, when comparing its historical volatility, Liontown Resources Limited is 26.19 times less risky than Golden Goliath. The pink sheet trades about -0.41 of its potential returns per unit of risk. The Golden Goliath Resources is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Golden Goliath Resources on September 13, 2024 and sell it today you would lose (1.25) from holding Golden Goliath Resources or give up 41.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liontown Resources Limited vs. Golden Goliath Resources
Performance |
| Timeline |
| Liontown Resources |
| Golden Goliath Resources |
Liontown Resources and Golden Goliath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liontown Resources and Golden Goliath
The main advantage of trading using opposite Liontown Resources and Golden Goliath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontown Resources position performs unexpectedly, Golden Goliath 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 Golden Goliath will offset losses from the drop in Golden Goliath's long position.| Liontown Resources vs. Sayona Mining Limited | Liontown Resources vs. Core Lithium | Liontown Resources vs. Critical Elements | Liontown Resources vs. South32 ADR |
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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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