Correlation Between Lithium Australia and Ceylon Graphite
Can any of the company-specific risk be diversified away by investing in both Lithium Australia and Ceylon Graphite 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 Ceylon Graphite 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 Ceylon Graphite Corp, you can compare the effects of market volatilities on Lithium Australia and Ceylon Graphite 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 Ceylon Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Australia and Ceylon Graphite.
Diversification Opportunities for Lithium Australia and Ceylon Graphite
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lithium and Ceylon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Australia NL and Ceylon Graphite Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceylon Graphite 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 Ceylon Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceylon Graphite Corp has no effect on the direction of Lithium Australia i.e., Lithium Australia and Ceylon Graphite go up and down completely randomly.
Pair Corralation between Lithium Australia and Ceylon Graphite
Assuming the 90 days horizon Lithium Australia NL is expected to under-perform the Ceylon Graphite. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lithium Australia NL is 1.01 times less risky than Ceylon Graphite. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Ceylon Graphite Corp is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 1.71 in Ceylon Graphite Corp on August 24, 2024 and sell it today you would lose (0.47) from holding Ceylon Graphite Corp or give up 27.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Australia NL vs. Ceylon Graphite Corp
Performance |
| Timeline |
| Lithium Australia |
| Ceylon Graphite Corp |
Lithium Australia and Ceylon Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Australia and Ceylon Graphite
The main advantage of trading using opposite Lithium Australia and Ceylon Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Australia position performs unexpectedly, Ceylon Graphite 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 Ceylon Graphite will offset losses from the drop in Ceylon Graphite's long position.| Lithium Australia vs. Mundoro Capital | Lithium Australia vs. Norra Metals Corp | Lithium Australia vs. Ceylon Graphite Corp | Lithium Australia vs. Mason Graphite |
| Ceylon Graphite vs. Mundoro Capital | Ceylon Graphite vs. Norra Metals Corp | Ceylon Graphite vs. Mason Graphite | Ceylon Graphite vs. IGO Limited |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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