Correlation Between Lithium Australia and Core Assets
Can any of the company-specific risk be diversified away by investing in both Lithium Australia and Core Assets 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 Lithium Australia and Core Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Australia NL and Core Assets Corp, you can compare the effects of market volatilities on Lithium Australia and Core Assets 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 Lithium Australia with a short position of Core Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Australia and Core Assets.
Diversification Opportunities for Lithium Australia and Core Assets
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lithium and Core is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Australia NL and Core Assets Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Assets Corp and Lithium Australia 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 Lithium Australia NL are associated (or correlated) with Core Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Assets Corp has no effect on the direction of Lithium Australia i.e., Lithium Australia and Core Assets go up and down completely randomly.
Pair Corralation between Lithium Australia and Core Assets
Assuming the 90 days horizon Lithium Australia NL is expected to generate 9.31 times more return on investment than Core Assets. However, Lithium Australia is 9.31 times more volatile than Core Assets Corp. It trades about 0.06 of its potential returns per unit of risk. Core Assets Corp is currently generating about -0.06 per unit of risk. If you would invest 2.07 in Lithium Australia NL on December 11, 2024 and sell it today you would lose (1.52) from holding Lithium Australia NL or give up 73.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.35% |
| Values | Daily Returns |
Lithium Australia NL vs. Core Assets Corp
Performance |
| Timeline |
| Lithium Australia |
| Core Assets Corp |
Lithium Australia and Core Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Australia and Core Assets
The main advantage of trading using opposite Lithium Australia and Core Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Australia position performs unexpectedly, Core Assets 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 Core Assets will offset losses from the drop in Core Assets' long position.| Lithium Australia vs. Grid Metals Corp | ||
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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