Correlation Between STRAITS TRADG and Liontown Resources
Can any of the company-specific risk be diversified away by investing in both STRAITS TRADG 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 STRAITS TRADG and Liontown Resources 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 Liontown Resources Limited, you can compare the effects of market volatilities on STRAITS TRADG 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 STRAITS TRADG with a short position of Liontown Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAITS TRADG and Liontown Resources.
Diversification Opportunities for STRAITS TRADG and Liontown Resources
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STRAITS and Liontown is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding STRAITS TRADG SD and Liontown Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontown Resources 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 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 STRAITS TRADG i.e., STRAITS TRADG and Liontown Resources go up and down completely randomly.
Pair Corralation between STRAITS TRADG and Liontown Resources
Assuming the 90 days horizon STRAITS TRADG SD is expected to generate 0.16 times more return on investment than Liontown Resources. However, STRAITS TRADG SD is 6.29 times less risky than Liontown Resources. It trades about 0.07 of its potential returns per unit of risk. Liontown Resources Limited is currently generating about 0.0 per unit of risk. If you would invest 88.00 in STRAITS TRADG SD on September 24, 2024 and sell it today you would earn a total of 16.00 from holding STRAITS TRADG SD or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.41% |
| Values | Daily Returns |
STRAITS TRADG SD vs. Liontown Resources Limited
Performance |
| Timeline |
| STRAITS TRADG SD |
| Liontown Resources |
STRAITS TRADG and Liontown Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STRAITS TRADG and Liontown Resources
The main advantage of trading using opposite STRAITS TRADG and Liontown Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRAITS TRADG 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.| STRAITS TRADG vs. Rio Tinto Group | STRAITS TRADG vs. Anglo American plc | STRAITS TRADG vs. Liontown Resources Limited | STRAITS TRADG vs. NEXA RESOURCES SA |
| Liontown Resources vs. Rio Tinto Group | Liontown Resources vs. Anglo American plc | Liontown Resources vs. NEXA RESOURCES SA | Liontown Resources vs. STRAITS TRADG SD |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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