Correlation Between Rock Tech and Frontier Lithium
Can any of the company-specific risk be diversified away by investing in both Rock Tech and Frontier 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 Frontier 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 Frontier Lithium, you can compare the effects of market volatilities on Rock Tech and Frontier 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 Frontier Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rock Tech and Frontier Lithium.
Diversification Opportunities for Rock Tech and Frontier Lithium
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rock and Frontier is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Rock Tech Lithium and Frontier Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Lithium 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 Frontier Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Lithium has no effect on the direction of Rock Tech i.e., Rock Tech and Frontier Lithium go up and down completely randomly.
Pair Corralation between Rock Tech and Frontier Lithium
Assuming the 90 days horizon Rock Tech Lithium is expected to under-perform the Frontier Lithium. In addition to that, Rock Tech is 1.23 times more volatile than Frontier Lithium. It trades about -0.13 of its total potential returns per unit of risk. Frontier Lithium is currently generating about -0.15 per unit of volatility. If you would invest 42.00 in Frontier Lithium on August 30, 2024 and sell it today you would lose (7.00) from holding Frontier Lithium or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rock Tech Lithium vs. Frontier Lithium
Performance |
| Timeline |
| Rock Tech Lithium |
| Frontier Lithium |
Rock Tech and Frontier Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rock Tech and Frontier Lithium
The main advantage of trading using opposite Rock Tech and Frontier Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rock Tech position performs unexpectedly, Frontier 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 Frontier Lithium will offset losses from the drop in Frontier 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 |
| Frontier Lithium vs. Vision Lithium | Frontier Lithium vs. Critical Elements | Frontier Lithium vs. Cypress Development Corp | Frontier Lithium vs. Core 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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