Correlation Between Allkem and Searchlight Resources
Can any of the company-specific risk be diversified away by investing in both Allkem and Searchlight Resources 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 Searchlight Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allkem and Searchlight Resources, you can compare the effects of market volatilities on Allkem and Searchlight Resources 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 Searchlight Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allkem and Searchlight Resources.
Diversification Opportunities for Allkem and Searchlight Resources
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Allkem and Searchlight is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Allkem and Searchlight Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Searchlight Resources 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 Searchlight Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Searchlight Resources has no effect on the direction of Allkem i.e., Allkem and Searchlight Resources go up and down completely randomly.
Pair Corralation between Allkem and Searchlight Resources
If you would invest 0.69 in Searchlight Resources on November 2, 2024 and sell it today you would earn a total of 0.09 from holding Searchlight Resources or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
Allkem vs. Searchlight Resources
Performance |
| Timeline |
| Allkem |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Searchlight Resources |
Allkem and Searchlight Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allkem and Searchlight Resources
The main advantage of trading using opposite Allkem and Searchlight Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allkem position performs unexpectedly, Searchlight Resources 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 Searchlight Resources will offset losses from the drop in Searchlight Resources' long position.| Allkem vs. Eastman Chemical | Allkem vs. Aldel Financial II | Allkem vs. Ecolab Inc | Allkem vs. Artisan Partners Asset |
| Searchlight Resources vs. Pampa Metals | Searchlight Resources vs. Progressive Planet Solutions | Searchlight Resources vs. Durango Resources | Searchlight Resources vs. Avarone Metals |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |