Correlation Between Rock Tech and American Lithium
Can any of the company-specific risk be diversified away by investing in both Rock Tech and American 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 Rock Tech and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rock Tech Lithium and American Lithium Corp, you can compare the effects of market volatilities on Rock Tech and American 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 Rock Tech with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rock Tech and American Lithium.
Diversification Opportunities for Rock Tech and American Lithium
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Rock and American is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Rock Tech Lithium and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp and Rock Tech 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 Rock Tech Lithium are associated (or correlated) with American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Rock Tech i.e., Rock Tech and American Lithium go up and down completely randomly.
Pair Corralation between Rock Tech and American Lithium
If you would invest 34.00 in American Lithium Corp on August 29, 2024 and sell it today you would earn a total of 0.00 from holding American Lithium Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.79% |
| Values | Daily Returns |
Rock Tech Lithium vs. American Lithium Corp
Performance |
| Timeline |
| Rock Tech Lithium |
| American Lithium Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Rock Tech and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rock Tech and American Lithium
The main advantage of trading using opposite Rock Tech and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rock Tech position performs unexpectedly, American 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 American Lithium will offset losses from the drop in American Lithium's long position.| Rock Tech vs. Rockridge Resources | Rock Tech vs. Ameriwest Lithium | Rock Tech vs. Osisko Metals Incorporated | Rock Tech vs. Volt Lithium Corp |
| American Lithium vs. American Lithium Corp | American Lithium vs. Frontier Lithium | American Lithium vs. Cypress Development Corp | American Lithium vs. Rock Tech Lithium |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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