Correlation Between Lithium Australia and Edison Cobalt
Can any of the company-specific risk be diversified away by investing in both Lithium Australia and Edison Cobalt 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 Edison Cobalt 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 Edison Cobalt Corp, you can compare the effects of market volatilities on Lithium Australia and Edison Cobalt 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 Edison Cobalt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Australia and Edison Cobalt.
Diversification Opportunities for Lithium Australia and Edison Cobalt
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lithium and Edison is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Australia NL and Edison Cobalt Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edison Cobalt 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 Edison Cobalt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edison Cobalt Corp has no effect on the direction of Lithium Australia i.e., Lithium Australia and Edison Cobalt go up and down completely randomly.
Pair Corralation between Lithium Australia and Edison Cobalt
Assuming the 90 days horizon Lithium Australia NL is expected to generate 12.27 times more return on investment than Edison Cobalt. However, Lithium Australia is 12.27 times more volatile than Edison Cobalt Corp. It trades about 0.15 of its potential returns per unit of risk. Edison Cobalt Corp is currently generating about 0.05 per unit of risk. If you would invest 0.01 in Lithium Australia NL on August 25, 2024 and sell it today you would earn a total of 1.14 from holding Lithium Australia NL or generate 11400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Australia NL vs. Edison Cobalt Corp
Performance |
| Timeline |
| Lithium Australia |
| Edison Cobalt Corp |
Lithium Australia and Edison Cobalt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Australia and Edison Cobalt
The main advantage of trading using opposite Lithium Australia and Edison Cobalt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Australia position performs unexpectedly, Edison Cobalt 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 Edison Cobalt will offset losses from the drop in Edison Cobalt's long position.| Lithium Australia vs. Norra Metals Corp | Lithium Australia vs. ZincX Resources Corp | Lithium Australia vs. Nuinsco Resources Limited | Lithium Australia vs. South Star Battery |
| Edison Cobalt vs. Norra Metals Corp | Edison Cobalt vs. ZincX Resources Corp | Edison Cobalt vs. Nuinsco Resources Limited | Edison Cobalt vs. South Star Battery |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |