Correlation Between ZincX Resources and Lithium Ionic
Can any of the company-specific risk be diversified away by investing in both ZincX Resources and Lithium Ionic 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 ZincX Resources and Lithium Ionic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZincX Resources Corp and Lithium Ionic Corp, you can compare the effects of market volatilities on ZincX Resources and Lithium Ionic 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 ZincX Resources with a short position of Lithium Ionic. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZincX Resources and Lithium Ionic.
Diversification Opportunities for ZincX Resources and Lithium Ionic
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ZincX and Lithium is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ZincX Resources Corp and Lithium Ionic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Ionic Corp and ZincX Resources 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 ZincX Resources Corp are associated (or correlated) with Lithium Ionic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Ionic Corp has no effect on the direction of ZincX Resources i.e., ZincX Resources and Lithium Ionic go up and down completely randomly.
Pair Corralation between ZincX Resources and Lithium Ionic
Assuming the 90 days horizon ZincX Resources Corp is expected to under-perform the Lithium Ionic. But the pink sheet apears to be less risky and, when comparing its historical volatility, ZincX Resources Corp is 1.9 times less risky than Lithium Ionic. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Lithium Ionic Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 52.00 in Lithium Ionic Corp on August 29, 2024 and sell it today you would earn a total of 15.00 from holding Lithium Ionic Corp or generate 28.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZincX Resources Corp vs. Lithium Ionic Corp
Performance |
| Timeline |
| ZincX Resources Corp |
| Lithium Ionic Corp |
ZincX Resources and Lithium Ionic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZincX Resources and Lithium Ionic
The main advantage of trading using opposite ZincX Resources and Lithium Ionic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZincX Resources position performs unexpectedly, Lithium Ionic 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 Lithium Ionic will offset losses from the drop in Lithium Ionic's long position.The idea behind ZincX Resources Corp and Lithium Ionic Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lithium Ionic vs. IGO Limited | Lithium Ionic vs. Grid Metals Corp | Lithium Ionic vs. First American Silver | Lithium Ionic vs. Qubec Nickel 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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