Correlation Between South Star and Lynas Rare
Can any of the company-specific risk be diversified away by investing in both South Star and Lynas Rare 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 South Star and Lynas Rare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Star Battery and Lynas Rare Earths, you can compare the effects of market volatilities on South Star and Lynas Rare 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 South Star with a short position of Lynas Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Star and Lynas Rare.
Diversification Opportunities for South Star and Lynas Rare
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between South and Lynas is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding South Star Battery and Lynas Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lynas Rare Earths and South Star 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 South Star Battery are associated (or correlated) with Lynas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lynas Rare Earths has no effect on the direction of South Star i.e., South Star and Lynas Rare go up and down completely randomly.
Pair Corralation between South Star and Lynas Rare
Assuming the 90 days horizon South Star Battery is expected to generate 2.41 times more return on investment than Lynas Rare. However, South Star is 2.41 times more volatile than Lynas Rare Earths. It trades about 0.03 of its potential returns per unit of risk. Lynas Rare Earths is currently generating about 0.01 per unit of risk. If you would invest 40.00 in South Star Battery on August 26, 2024 and sell it today you would earn a total of 3.00 from holding South Star Battery or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.09% |
| Values | Daily Returns |
South Star Battery vs. Lynas Rare Earths
Performance |
| Timeline |
| South Star Battery |
| Lynas Rare Earths |
South Star and Lynas Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Star and Lynas Rare
The main advantage of trading using opposite South Star and Lynas Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Star position performs unexpectedly, Lynas Rare 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 Lynas Rare will offset losses from the drop in Lynas Rare's long position.| South Star vs. Norra Metals Corp | South Star vs. ZincX Resources Corp | South Star vs. Nuinsco Resources Limited | South Star vs. Mundoro Capital |
| Lynas Rare vs. Norra Metals Corp | Lynas Rare vs. ZincX Resources Corp | Lynas Rare vs. Nuinsco Resources Limited | Lynas Rare vs. Mundoro Capital |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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