Correlation Between Allkem and Lithium Energi
Can any of the company-specific risk be diversified away by investing in both Allkem and Lithium Energi 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 Allkem and Lithium Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allkem and Lithium Energi Exploration, you can compare the effects of market volatilities on Allkem and Lithium Energi 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 Allkem with a short position of Lithium Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allkem and Lithium Energi.
Diversification Opportunities for Allkem and Lithium Energi
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Allkem and Lithium is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Allkem and Lithium Energi Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Energi Explo and Allkem 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 Allkem are associated (or correlated) with Lithium Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Energi Explo has no effect on the direction of Allkem i.e., Allkem and Lithium Energi go up and down completely randomly.
Pair Corralation between Allkem and Lithium Energi
If you would invest 998.00 in Allkem on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Allkem or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Allkem vs. Lithium Energi Exploration
Performance |
| Timeline |
| Allkem |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lithium Energi Explo |
Allkem and Lithium Energi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allkem and Lithium Energi
The main advantage of trading using opposite Allkem and Lithium Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allkem position performs unexpectedly, Lithium Energi 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 Lithium Energi will offset losses from the drop in Lithium Energi's long position.The idea behind Allkem and Lithium Energi Exploration 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.| Lithium Energi vs. Qubec Nickel Corp | Lithium Energi vs. IGO Limited | Lithium Energi vs. Focus Graphite | Lithium Energi vs. Mineral Res |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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