Correlation Between STRAITS TRADG and American Lithium
Can any of the company-specific risk be diversified away by investing in both STRAITS TRADG and American 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 STRAITS TRADG and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STRAITS TRADG SD and American Lithium Corp, you can compare the effects of market volatilities on STRAITS TRADG and American 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 STRAITS TRADG with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAITS TRADG and American Lithium.
Diversification Opportunities for STRAITS TRADG and American Lithium
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STRAITS and American is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding STRAITS TRADG SD and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp and STRAITS TRADG 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 STRAITS TRADG SD are associated (or correlated) with American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of STRAITS TRADG i.e., STRAITS TRADG and American Lithium go up and down completely randomly.
Pair Corralation between STRAITS TRADG and American Lithium
Assuming the 90 days horizon STRAITS TRADG SD is expected to generate 0.17 times more return on investment than American Lithium. However, STRAITS TRADG SD is 5.77 times less risky than American Lithium. It trades about 0.01 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.14 per unit of risk. If you would invest 99.00 in STRAITS TRADG SD on October 12, 2024 and sell it today you would earn a total of 0.00 from holding STRAITS TRADG SD or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STRAITS TRADG SD vs. American Lithium Corp
Performance |
| Timeline |
| STRAITS TRADG SD |
| American Lithium Corp |
STRAITS TRADG and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STRAITS TRADG and American Lithium
The main advantage of trading using opposite STRAITS TRADG and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRAITS TRADG position performs unexpectedly, American 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 American Lithium will offset losses from the drop in American Lithium's long position.| STRAITS TRADG vs. ADRIATIC METALS LS 013355 | STRAITS TRADG vs. Superior Plus Corp | STRAITS TRADG vs. NMI Holdings | STRAITS TRADG vs. SIVERS SEMICONDUCTORS AB |
| American Lithium vs. Standard Lithium | American Lithium vs. BYD Company Limited | American Lithium vs. Rock Tech Lithium |
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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