Correlation Between Sayona Mining and Liontown Resources
Can any of the company-specific risk be diversified away by investing in both Sayona Mining and Liontown Resources 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 Sayona Mining and Liontown Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sayona Mining Limited and Liontown Resources Limited, you can compare the effects of market volatilities on Sayona Mining and Liontown Resources 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 Sayona Mining with a short position of Liontown Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sayona Mining and Liontown Resources.
Diversification Opportunities for Sayona Mining and Liontown Resources
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sayona and Liontown is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sayona Mining Limited and Liontown Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontown Resources and Sayona Mining 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 Sayona Mining Limited are associated (or correlated) with Liontown Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontown Resources has no effect on the direction of Sayona Mining i.e., Sayona Mining and Liontown Resources go up and down completely randomly.
Pair Corralation between Sayona Mining and Liontown Resources
Assuming the 90 days horizon Sayona Mining Limited is expected to generate 1.39 times more return on investment than Liontown Resources. However, Sayona Mining is 1.39 times more volatile than Liontown Resources Limited. It trades about 0.0 of its potential returns per unit of risk. Liontown Resources Limited is currently generating about -0.05 per unit of risk. If you would invest 2.90 in Sayona Mining Limited on September 1, 2024 and sell it today you would lose (0.87) from holding Sayona Mining Limited or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sayona Mining Limited vs. Liontown Resources Limited
Performance |
| Timeline |
| Sayona Mining Limited |
| Liontown Resources |
Sayona Mining and Liontown Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sayona Mining and Liontown Resources
The main advantage of trading using opposite Sayona Mining and Liontown Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sayona Mining position performs unexpectedly, Liontown Resources 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 Liontown Resources will offset losses from the drop in Liontown Resources' long position.| Sayona Mining vs. Portofino Resources | Sayona Mining vs. Core Lithium | Sayona Mining vs. Global Energy Metals | Sayona Mining vs. Clime Investment Management |
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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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