Correlation Between Standard Lithium and Varta AG
Can any of the company-specific risk be diversified away by investing in both Standard Lithium and Varta AG 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 Standard Lithium and Varta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Lithium and Varta AG, you can compare the effects of market volatilities on Standard Lithium and Varta AG 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 Standard Lithium with a short position of Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Lithium and Varta AG.
Diversification Opportunities for Standard Lithium and Varta AG
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Standard and Varta is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Standard Lithium and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG and Standard Lithium 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 Standard Lithium are associated (or correlated) with Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of Standard Lithium i.e., Standard Lithium and Varta AG go up and down completely randomly.
Pair Corralation between Standard Lithium and Varta AG
Assuming the 90 days horizon Standard Lithium is expected to generate 0.54 times more return on investment than Varta AG. However, Standard Lithium is 1.86 times less risky than Varta AG. It trades about -0.01 of its potential returns per unit of risk. Varta AG is currently generating about -0.01 per unit of risk. If you would invest 315.00 in Standard Lithium on September 13, 2024 and sell it today you would lose (161.00) from holding Standard Lithium or give up 51.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Lithium vs. Varta AG
Performance |
| Timeline |
| Standard Lithium |
| Varta AG |
Standard Lithium and Varta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Lithium and Varta AG
The main advantage of trading using opposite Standard Lithium and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Lithium position performs unexpectedly, Varta AG 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 Varta AG will offset losses from the drop in Varta AG's long position.| Standard Lithium vs. BYD Company Limited | Standard Lithium vs. JinkoSolar Holding Co | Standard Lithium vs. American Lithium Corp | Standard Lithium vs. Samsung SDI Co |
| Varta AG vs. Kaiser Aluminum | Varta AG vs. ANGLER GAMING PLC | Varta AG vs. Hochschild Mining plc | Varta AG vs. LION ONE 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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