Correlation Between Premium Nickel and Stria Lithium
Can any of the company-specific risk be diversified away by investing in both Premium Nickel and Stria 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 Premium Nickel and Stria Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premium Nickel Resources and Stria Lithium, you can compare the effects of market volatilities on Premium Nickel and Stria 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 Premium Nickel with a short position of Stria Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Nickel and Stria Lithium.
Diversification Opportunities for Premium Nickel and Stria Lithium
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premium and Stria is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Premium Nickel Resources and Stria Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stria Lithium and Premium Nickel 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 Premium Nickel Resources are associated (or correlated) with Stria Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stria Lithium has no effect on the direction of Premium Nickel i.e., Premium Nickel and Stria Lithium go up and down completely randomly.
Pair Corralation between Premium Nickel and Stria Lithium
Assuming the 90 days horizon Premium Nickel Resources is expected to under-perform the Stria Lithium. But the pink sheet apears to be less risky and, when comparing its historical volatility, Premium Nickel Resources is 1.55 times less risky than Stria Lithium. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Stria Lithium is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4.20 in Stria Lithium on August 28, 2024 and sell it today you would lose (0.06) from holding Stria Lithium or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premium Nickel Resources vs. Stria Lithium
Performance |
| Timeline |
| Premium Nickel Resources |
| Stria Lithium |
Premium Nickel and Stria Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premium Nickel and Stria Lithium
The main advantage of trading using opposite Premium Nickel and Stria Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premium Nickel position performs unexpectedly, Stria 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 Stria Lithium will offset losses from the drop in Stria Lithium's long position.The idea behind Premium Nickel Resources and Stria Lithium 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.| Stria Lithium vs. Premium Nickel Resources | Stria Lithium vs. Juggernaut Exploration | Stria Lithium vs. Intrepid Metals Corp | Stria Lithium vs. Group Ten 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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