Correlation Between Liontown Resources and Pampa Metals
Can any of the company-specific risk be diversified away by investing in both Liontown Resources and Pampa Metals 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 Pampa Metals 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 Pampa Metals, you can compare the effects of market volatilities on Liontown Resources and Pampa Metals 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 Pampa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontown Resources and Pampa Metals.
Diversification Opportunities for Liontown Resources and Pampa Metals
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liontown and Pampa is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources Limited and Pampa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Metals 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 Pampa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Metals has no effect on the direction of Liontown Resources i.e., Liontown Resources and Pampa Metals go up and down completely randomly.
Pair Corralation between Liontown Resources and Pampa Metals
Assuming the 90 days horizon Liontown Resources Limited is expected to under-perform the Pampa Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Liontown Resources Limited is 1.19 times less risky than Pampa Metals. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Pampa Metals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Pampa Metals on August 31, 2024 and sell it today you would lose (10.00) from holding Pampa Metals or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liontown Resources Limited vs. Pampa Metals
Performance |
| Timeline |
| Liontown Resources |
| Pampa Metals |
Liontown Resources and Pampa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liontown Resources and Pampa Metals
The main advantage of trading using opposite Liontown Resources and Pampa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontown Resources position performs unexpectedly, Pampa Metals 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 Pampa Metals will offset losses from the drop in Pampa Metals' long position.| Liontown Resources vs. Sayona Mining Limited | Liontown Resources vs. Core Lithium | Liontown Resources vs. Critical Elements | Liontown Resources vs. South32 ADR |
| Pampa Metals vs. Liontown Resources Limited | Pampa Metals vs. ATT Inc | Pampa Metals vs. Merck Company | Pampa Metals vs. Walt Disney |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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