Correlation Between Lithium Tech and International Lithium
Can any of the company-specific risk be diversified away by investing in both Lithium Tech and International Lithium 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 Tech and International Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Tech Cp and International Lithium Corp, you can compare the effects of market volatilities on Lithium Tech and International Lithium 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 Tech with a short position of International Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Tech and International Lithium.
Diversification Opportunities for Lithium Tech and International Lithium
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lithium and International is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Tech Cp and International Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Lithium and Lithium Tech 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 Tech Cp are associated (or correlated) with International Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Lithium has no effect on the direction of Lithium Tech i.e., Lithium Tech and International Lithium go up and down completely randomly.
Pair Corralation between Lithium Tech and International Lithium
If you would invest 1.22 in International Lithium Corp on August 24, 2024 and sell it today you would lose (0.11) from holding International Lithium Corp or give up 9.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lithium Tech Cp vs. International Lithium Corp
Performance |
| Timeline |
| Lithium Tech Cp |
| International Lithium |
Lithium Tech and International Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Tech and International Lithium
The main advantage of trading using opposite Lithium Tech and International Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Tech position performs unexpectedly, International Lithium 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 International Lithium will offset losses from the drop in International Lithium's long position.| Lithium Tech vs. International Lithium Corp | Lithium Tech vs. Ultra Resources | Lithium Tech vs. Altura Mining Limited | Lithium Tech vs. Infinite Ore Corp |
| International Lithium vs. Decade Resources | International Lithium vs. Silver Spruce Resources | International Lithium vs. Grid Metals Corp | International Lithium vs. Canada Rare Earth |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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