Correlation Between Sayona Mining and Standard Lithium
Can any of the company-specific risk be diversified away by investing in both Sayona Mining and Standard 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 Standard 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 Standard Lithium, you can compare the effects of market volatilities on Sayona Mining and Standard 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 Standard Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sayona Mining and Standard Lithium.
Diversification Opportunities for Sayona Mining and Standard Lithium
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sayona and Standard is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sayona Mining Limited and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium 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 Standard Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Lithium has no effect on the direction of Sayona Mining i.e., Sayona Mining and Standard Lithium go up and down completely randomly.
Pair Corralation between Sayona Mining and Standard Lithium
Assuming the 90 days horizon Sayona Mining Limited is expected to generate 1.72 times more return on investment than Standard Lithium. However, Sayona Mining is 1.72 times more volatile than Standard Lithium. It trades about -0.01 of its potential returns per unit of risk. Standard Lithium is currently generating about -0.24 per unit of risk. 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 |
Sayona Mining Limited vs. Standard Lithium
Performance |
| Timeline |
| Sayona Mining Limited |
| Standard Lithium |
Sayona Mining and Standard Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sayona Mining and Standard Lithium
The main advantage of trading using opposite Sayona Mining and Standard Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sayona Mining position performs unexpectedly, Standard 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 Standard Lithium will offset losses from the drop in Standard 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 |
| Standard Lithium vs. NioCorp Developments Ltd | Standard Lithium vs. Teck Resources Ltd | Standard Lithium vs. Sigma Lithium Resources | Standard Lithium vs. MP Materials Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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