Correlation Between Standard Lithium and Sayona Mining
Can any of the company-specific risk be diversified away by investing in both Standard Lithium and Sayona Mining 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 Sayona Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Lithium and Sayona Mining Limited, you can compare the effects of market volatilities on Standard Lithium and Sayona Mining 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 Sayona Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Lithium and Sayona Mining.
Diversification Opportunities for Standard Lithium and Sayona Mining
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Standard and Sayona is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Standard Lithium and Sayona Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sayona Mining Limited 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 Sayona Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sayona Mining Limited has no effect on the direction of Standard Lithium i.e., Standard Lithium and Sayona Mining go up and down completely randomly.
Pair Corralation between Standard Lithium and Sayona Mining
Considering the 90-day investment horizon Standard Lithium is expected to under-perform the Sayona Mining. But the stock apears to be less risky and, when comparing its historical volatility, Standard Lithium is 1.72 times less risky than Sayona Mining. The stock trades about -0.24 of its potential returns per unit of risk. The Sayona Mining Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2.22 in Sayona Mining Limited on September 1, 2024 and sell it today you would lose (0.19) from holding Sayona Mining Limited or give up 8.56% 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. Sayona Mining Limited
Performance |
| Timeline |
| Standard Lithium |
| Sayona Mining Limited |
Standard Lithium and Sayona Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Lithium and Sayona Mining
The main advantage of trading using opposite Standard Lithium and Sayona Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Lithium position performs unexpectedly, Sayona Mining 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 Sayona Mining will offset losses from the drop in Sayona Mining's long position.| Standard Lithium vs. NioCorp Developments Ltd | Standard Lithium vs. Teck Resources Ltd | Standard Lithium vs. Sigma Lithium Resources | Standard Lithium vs. MP Materials Corp |
| Sayona Mining vs. Portofino Resources | Sayona Mining vs. Core Lithium | Sayona Mining vs. Global Energy Metals | Sayona Mining vs. Clime Investment Management |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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