Correlation Between Liontown Resources and Allkem
Can any of the company-specific risk be diversified away by investing in both Liontown Resources and Allkem 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 Allkem 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 Allkem, you can compare the effects of market volatilities on Liontown Resources and Allkem 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 Allkem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontown Resources and Allkem.
Diversification Opportunities for Liontown Resources and Allkem
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Liontown and Allkem is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources Limited and Allkem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allkem 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 Allkem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allkem has no effect on the direction of Liontown Resources i.e., Liontown Resources and Allkem go up and down completely randomly.
Pair Corralation between Liontown Resources and Allkem
If you would invest 33.00 in Liontown Resources Limited on October 20, 2024 and sell it today you would earn a total of 8.00 from holding Liontown Resources Limited or generate 24.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Liontown Resources Limited vs. Allkem
Performance |
| Timeline |
| Liontown Resources |
| Allkem |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Liontown Resources and Allkem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liontown Resources and Allkem
The main advantage of trading using opposite Liontown Resources and Allkem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontown Resources position performs unexpectedly, Allkem 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 Allkem will offset losses from the drop in Allkem's long position.| Liontown Resources vs. Sayona Mining Limited | Liontown Resources vs. Core Lithium | Liontown Resources vs. Critical Elements | Liontown Resources vs. South32 ADR |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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