Correlation Between Noram Lithium and CANEX Metals
Can any of the company-specific risk be diversified away by investing in both Noram Lithium and CANEX Metals 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 Noram Lithium and CANEX Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noram Lithium Corp and CANEX Metals, you can compare the effects of market volatilities on Noram Lithium and CANEX Metals 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 Noram Lithium with a short position of CANEX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noram Lithium and CANEX Metals.
Diversification Opportunities for Noram Lithium and CANEX Metals
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Noram and CANEX is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Noram Lithium Corp and CANEX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANEX Metals and Noram Lithium 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 Noram Lithium Corp are associated (or correlated) with CANEX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANEX Metals has no effect on the direction of Noram Lithium i.e., Noram Lithium and CANEX Metals go up and down completely randomly.
Pair Corralation between Noram Lithium and CANEX Metals
Assuming the 90 days horizon Noram Lithium Corp is expected to under-perform the CANEX Metals. But the stock apears to be less risky and, when comparing its historical volatility, Noram Lithium Corp is 2.7 times less risky than CANEX Metals. The stock trades about -0.02 of its potential returns per unit of risk. The CANEX Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4.00 in CANEX Metals on September 3, 2024 and sell it today you would earn a total of 0.00 from holding CANEX Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Noram Lithium Corp vs. CANEX Metals
Performance |
| Timeline |
| Noram Lithium Corp |
| CANEX Metals |
Noram Lithium and CANEX Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noram Lithium and CANEX Metals
The main advantage of trading using opposite Noram Lithium and CANEX Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noram Lithium position performs unexpectedly, CANEX Metals 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 CANEX Metals will offset losses from the drop in CANEX Metals' long position.| Noram Lithium vs. Algoma Steel Group | Noram Lithium vs. Champion Iron | Noram Lithium vs. International Zeolite Corp | Noram Lithium vs. European Residential Real |
| CANEX Metals vs. Algoma Steel Group | CANEX Metals vs. Champion Iron | CANEX Metals vs. International Zeolite Corp | CANEX Metals vs. European Residential Real |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |