Correlation Between Frontier Lithium and Altura Mining
Can any of the company-specific risk be diversified away by investing in both Frontier Lithium and Altura Mining 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 Frontier Lithium and Altura Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Lithium and Altura Mining Limited, you can compare the effects of market volatilities on Frontier Lithium and Altura Mining 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 Frontier Lithium with a short position of Altura Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Lithium and Altura Mining.
Diversification Opportunities for Frontier Lithium and Altura Mining
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Frontier and Altura is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Lithium and Altura Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura Mining Limited and Frontier 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 Frontier Lithium are associated (or correlated) with Altura Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altura Mining Limited has no effect on the direction of Frontier Lithium i.e., Frontier Lithium and Altura Mining go up and down completely randomly.
Pair Corralation between Frontier Lithium and Altura Mining
Assuming the 90 days horizon Frontier Lithium is expected to generate 91.77 times less return on investment than Altura Mining. But when comparing it to its historical volatility, Frontier Lithium is 5.93 times less risky than Altura Mining. It trades about 0.01 of its potential returns per unit of risk. Altura Mining Limited is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1.20 in Altura Mining Limited on November 5, 2024 and sell it today you would earn a total of 1.10 from holding Altura Mining Limited or generate 91.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Frontier Lithium vs. Altura Mining Limited
Performance |
| Timeline |
| Frontier Lithium |
| Altura Mining Limited |
Frontier Lithium and Altura Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Lithium and Altura Mining
The main advantage of trading using opposite Frontier Lithium and Altura Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Lithium position performs unexpectedly, Altura Mining 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 Altura Mining will offset losses from the drop in Altura Mining's long position.| Frontier Lithium vs. Vision Lithium | Frontier Lithium vs. Critical Elements | Frontier Lithium vs. Cypress Development Corp | Frontier Lithium vs. Core Lithium |
| Altura Mining vs. Aurelia Metals Limited | Altura Mining vs. Ascendant Resources | Altura Mining vs. Artemis Resources | Altura Mining vs. Azimut Exploration |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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