Correlation Between US Lithium and Amexdrug
Can any of the company-specific risk be diversified away by investing in both US Lithium and Amexdrug 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 US Lithium and Amexdrug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Lithium Corp and Amexdrug, you can compare the effects of market volatilities on US Lithium and Amexdrug 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 US Lithium with a short position of Amexdrug. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Lithium and Amexdrug.
Diversification Opportunities for US Lithium and Amexdrug
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between LITH and Amexdrug is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding US Lithium Corp and Amexdrug in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amexdrug and US Lithium 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 US Lithium Corp are associated (or correlated) with Amexdrug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amexdrug has no effect on the direction of US Lithium i.e., US Lithium and Amexdrug go up and down completely randomly.
Pair Corralation between US Lithium and Amexdrug
Given the investment horizon of 90 days US Lithium is expected to generate 6.13 times less return on investment than Amexdrug. But when comparing it to its historical volatility, US Lithium Corp is 7.56 times less risky than Amexdrug. It trades about 0.05 of its potential returns per unit of risk. Amexdrug is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Amexdrug on September 3, 2024 and sell it today you would lose (16.80) from holding Amexdrug or give up 98.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
US Lithium Corp vs. Amexdrug
Performance |
| Timeline |
| US Lithium Corp |
| Amexdrug |
US Lithium and Amexdrug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Lithium and Amexdrug
The main advantage of trading using opposite US Lithium and Amexdrug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Lithium position performs unexpectedly, Amexdrug 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 Amexdrug will offset losses from the drop in Amexdrug's long position.| US Lithium vs. Mc Endvrs | US Lithium vs. Kali Inc | US Lithium vs. One World Pharma | US Lithium vs. HempAmericana |
| Amexdrug vs. Topbuild Corp | Amexdrug vs. ChampionX | Amexdrug vs. Everus Construction Group | Amexdrug vs. Mediag3 |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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