Correlation Between American Helium and Snow Lake

Can any of the company-specific risk be diversified away by investing in both American Helium and Snow Lake 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 American Helium and Snow Lake into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Helium and Snow Lake Resources, you can compare the effects of market volatilities on American Helium and Snow Lake 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 American Helium with a short position of Snow Lake. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Helium and Snow Lake.

Diversification Opportunities for American Helium and Snow Lake

-0.43

Correlation Coefficient

American Helium  Snow Lake

Very good diversification

The 3 months correlation between American and Snow is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding American Helium and Snow Lake Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snow Lake Resources and American Helium 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 American Helium are associated (or correlated) with Snow Lake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snow Lake Resources has no effect on the direction of American Helium i.e., American Helium and Snow Lake go up and down completely randomly.

Pair Corralation between American Helium and Snow Lake

Assuming the 90 days horizon American Helium is expected to generate 0.59 times more return on investment than Snow Lake. However, American Helium is 1.7 times less risky than Snow Lake. It trades about 0.21 of its potential returns per unit of risk. Snow Lake Resources is currently generating about -0.42 per unit of risk. If you would invest  10.00  in American Helium on November 29, 2024 and sell it today you would earn a total of  2.00  from holding American Helium or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

American Helium  vs.  Snow Lake Resources

American Helium

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Helium are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, American Helium may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Snow Lake Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Snow Lake Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Snow Lake displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Helium and Snow Lake

The main advantage of trading using opposite American Helium and Snow Lake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Helium position performs unexpectedly, Snow Lake 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 Snow Lake will offset losses from the drop in Snow Lake's long position.

The idea behind American Helium and Snow Lake Resources 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.

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 Stocks Directory module to find actively traded stocks across global markets.