Correlation Between Lake Resources and Ardiden
Can any of the company-specific risk be diversified away by investing in both Lake Resources and Ardiden 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 Lake Resources and Ardiden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lake Resources NL and Ardiden Limited, you can compare the effects of market volatilities on Lake Resources and Ardiden 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 Lake Resources with a short position of Ardiden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Ardiden.
Diversification Opportunities for Lake Resources and Ardiden
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lake and Ardiden is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Ardiden Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardiden Limited and Lake 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 Lake Resources NL are associated (or correlated) with Ardiden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardiden Limited has no effect on the direction of Lake Resources i.e., Lake Resources and Ardiden go up and down completely randomly.
Pair Corralation between Lake Resources and Ardiden
Assuming the 90 days horizon Lake Resources NL is expected to generate 0.29 times more return on investment than Ardiden. However, Lake Resources NL is 3.48 times less risky than Ardiden. It trades about -0.12 of its potential returns per unit of risk. Ardiden Limited is currently generating about -0.3 per unit of risk. If you would invest 3.29 in Lake Resources NL on September 23, 2024 and sell it today you would lose (0.57) from holding Lake Resources NL or give up 17.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Resources NL vs. Ardiden Limited
Performance |
| Timeline |
| Lake Resources NL |
| Ardiden Limited |
Lake Resources and Ardiden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Resources and Ardiden
The main advantage of trading using opposite Lake Resources and Ardiden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources position performs unexpectedly, Ardiden 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 Ardiden will offset losses from the drop in Ardiden's long position.| Lake Resources vs. Stepan Company | Lake Resources vs. Eldorado Gold Corp | Lake Resources vs. Apogee Enterprises | Lake Resources vs. Precision Drilling |
| Ardiden vs. Altair International Corp | Ardiden vs. Global Battery Metals | Ardiden vs. Lake Resources NL | Ardiden vs. Jourdan Resources |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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