Correlation Between O3 Mining and Standard Lithium
Can any of the company-specific risk be diversified away by investing in both O3 Mining and Standard 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 O3 Mining and Standard Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between O3 Mining and Standard Lithium, you can compare the effects of market volatilities on O3 Mining and Standard 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 O3 Mining with a short position of Standard Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of O3 Mining and Standard Lithium.
Diversification Opportunities for O3 Mining and Standard Lithium
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between OIIIF and Standard is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding O3 Mining and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium and O3 Mining 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 O3 Mining are associated (or correlated) with Standard Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Lithium has no effect on the direction of O3 Mining i.e., O3 Mining and Standard Lithium go up and down completely randomly.
Pair Corralation between O3 Mining and Standard Lithium
Assuming the 90 days horizon O3 Mining is expected to generate 0.42 times more return on investment than Standard Lithium. However, O3 Mining is 2.38 times less risky than Standard Lithium. It trades about -0.13 of its potential returns per unit of risk. Standard Lithium is currently generating about -0.26 per unit of risk. If you would invest 82.00 in O3 Mining on August 29, 2024 and sell it today you would lose (5.00) from holding O3 Mining or give up 6.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
O3 Mining vs. Standard Lithium
Performance |
| Timeline |
| O3 Mining |
| Standard Lithium |
O3 Mining and Standard Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with O3 Mining and Standard Lithium
The main advantage of trading using opposite O3 Mining and Standard Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if O3 Mining position performs unexpectedly, Standard 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 Standard Lithium will offset losses from the drop in Standard Lithium's long position.| O3 Mining vs. Canstar Resources | O3 Mining vs. Benton Resources | O3 Mining vs. Prime Mining Corp | O3 Mining vs. Silver X Mining |
| Standard Lithium vs. Lithium Americas Corp | Standard Lithium vs. Piedmont Lithium Ltd | Standard Lithium vs. NioCorp Developments Ltd | Standard Lithium vs. Teck Resources Ltd |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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