Correlation Between Lithium Australia and Nuinsco Resources
Can any of the company-specific risk be diversified away by investing in both Lithium Australia and Nuinsco Resources 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 Nuinsco Resources 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 Nuinsco Resources Limited, you can compare the effects of market volatilities on Lithium Australia and Nuinsco Resources 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 Nuinsco Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Australia and Nuinsco Resources.
Diversification Opportunities for Lithium Australia and Nuinsco Resources
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lithium and Nuinsco is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Australia NL and Nuinsco Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuinsco Resources 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 Nuinsco Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuinsco Resources has no effect on the direction of Lithium Australia i.e., Lithium Australia and Nuinsco Resources go up and down completely randomly.
Pair Corralation between Lithium Australia and Nuinsco Resources
Assuming the 90 days horizon Lithium Australia NL is expected to generate 0.68 times more return on investment than Nuinsco Resources. However, Lithium Australia NL is 1.47 times less risky than Nuinsco Resources. It trades about 0.09 of its potential returns per unit of risk. Nuinsco Resources Limited is currently generating about -0.06 per unit of risk. If you would invest 1.45 in Lithium Australia NL on August 30, 2024 and sell it today you would earn a total of 0.05 from holding Lithium Australia NL or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Australia NL vs. Nuinsco Resources Limited
Performance |
| Timeline |
| Lithium Australia |
| Nuinsco Resources |
Lithium Australia and Nuinsco Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Australia and Nuinsco Resources
The main advantage of trading using opposite Lithium Australia and Nuinsco Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Australia position performs unexpectedly, Nuinsco Resources 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 Nuinsco Resources will offset losses from the drop in Nuinsco Resources' long position.| Lithium Australia vs. Ameriwest Lithium | Lithium Australia vs. Osisko Metals Incorporated | Lithium Australia vs. Volt Lithium Corp |
| Nuinsco Resources vs. Newport Gold | Nuinsco Resources vs. Monarca Minerals | Nuinsco Resources vs. First American Silver | Nuinsco Resources vs. Tamino Minerals |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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