Correlation Between LION ONE and ATLANTIC LITHIUM
Can any of the company-specific risk be diversified away by investing in both LION ONE and ATLANTIC 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 LION ONE and ATLANTIC LITHIUM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LION ONE METALS and ATLANTIC LITHIUM LTD, you can compare the effects of market volatilities on LION ONE and ATLANTIC 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 LION ONE with a short position of ATLANTIC LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and ATLANTIC LITHIUM.
Diversification Opportunities for LION ONE and ATLANTIC LITHIUM
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LION and ATLANTIC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and ATLANTIC LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATLANTIC LITHIUM LTD and LION ONE 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 LION ONE METALS are associated (or correlated) with ATLANTIC LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATLANTIC LITHIUM LTD has no effect on the direction of LION ONE i.e., LION ONE and ATLANTIC LITHIUM go up and down completely randomly.
Pair Corralation between LION ONE and ATLANTIC LITHIUM
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the ATLANTIC LITHIUM. But the stock apears to be less risky and, when comparing its historical volatility, LION ONE METALS is 1.65 times less risky than ATLANTIC LITHIUM. The stock trades about -0.08 of its potential returns per unit of risk. The ATLANTIC LITHIUM LTD is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 31.00 in ATLANTIC LITHIUM LTD on September 4, 2024 and sell it today you would lose (18.00) from holding ATLANTIC LITHIUM LTD or give up 58.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
LION ONE METALS vs. ATLANTIC LITHIUM LTD
Performance |
| Timeline |
| LION ONE METALS |
| ATLANTIC LITHIUM LTD |
LION ONE and ATLANTIC LITHIUM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and ATLANTIC LITHIUM
The main advantage of trading using opposite LION ONE and ATLANTIC LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, ATLANTIC 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 ATLANTIC LITHIUM will offset losses from the drop in ATLANTIC LITHIUM's long position.The idea behind LION ONE METALS and ATLANTIC LITHIUM LTD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ATLANTIC LITHIUM vs. Lion One Metals | ATLANTIC LITHIUM vs. LION ONE METALS | ATLANTIC LITHIUM vs. PARKEN Sport Entertainment | ATLANTIC LITHIUM vs. MagnaChip Semiconductor Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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