Correlation Between Sayona Mining and Sigma Lithium
Can any of the company-specific risk be diversified away by investing in both Sayona Mining and Sigma 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 Sayona Mining and Sigma Lithium 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 Sigma Lithium Resources, you can compare the effects of market volatilities on Sayona Mining and Sigma 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 Sayona Mining with a short position of Sigma Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sayona Mining and Sigma Lithium.
Diversification Opportunities for Sayona Mining and Sigma Lithium
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sayona and Sigma is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sayona Mining Limited and Sigma Lithium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigma Lithium 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 Sigma Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigma Lithium Resources has no effect on the direction of Sayona Mining i.e., Sayona Mining and Sigma Lithium go up and down completely randomly.
Pair Corralation between Sayona Mining and Sigma Lithium
Assuming the 90 days horizon Sayona Mining Limited is expected to under-perform the Sigma Lithium. In addition to that, Sayona Mining is 2.16 times more volatile than Sigma Lithium Resources. It trades about -0.04 of its total potential returns per unit of risk. Sigma Lithium Resources is currently generating about 0.0 per unit of volatility. If you would invest 1,415 in Sigma Lithium Resources on August 31, 2024 and sell it today you would lose (26.00) from holding Sigma Lithium Resources or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sayona Mining Limited vs. Sigma Lithium Resources
Performance |
| Timeline |
| Sayona Mining Limited |
| Sigma Lithium Resources |
Sayona Mining and Sigma Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sayona Mining and Sigma Lithium
The main advantage of trading using opposite Sayona Mining and Sigma Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sayona Mining position performs unexpectedly, Sigma 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 Sigma Lithium will offset losses from the drop in Sigma Lithium's long position.| Sayona Mining vs. Portofino Resources | Sayona Mining vs. Core Lithium | Sayona Mining vs. Global Energy Metals | Sayona Mining vs. Clime Investment Management |
| Sigma Lithium vs. Piedmont Lithium Ltd | Sigma Lithium vs. Standard Lithium | Sigma Lithium vs. Vale SA ADR | Sigma Lithium vs. BHP Group Limited |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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