Correlation Between Alternative Investment and Lake Resources

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

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

Diversification Opportunities for Alternative Investment and Lake Resources

-0.53

Correlation Coefficient

Alternative Investment  Lake Resources

Excellent diversification

The 3 months correlation between Alternative and Lake is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Investment Trust and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL and Alternative Investment 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 Alternative Investment Trust are associated (or correlated) with Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Alternative Investment i.e., Alternative Investment and Lake Resources go up and down completely randomly.

Pair Corralation between Alternative Investment and Lake Resources

Assuming the 90 days trading horizon Alternative Investment Trust is expected to generate 0.25 times more return on investment than Lake Resources. However, Alternative Investment Trust is 4.01 times less risky than Lake Resources. It trades about 0.1 of its potential returns per unit of risk. Lake Resources NL is currently generating about -0.07 per unit of risk. If you would invest  140.00  in Alternative Investment Trust on December 30, 2024 and sell it today you would earn a total of  8.00  from holding Alternative Investment Trust or generate 5.71% return on investment over 90 days.

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

Alternative Investment Trust  vs.  Lake Resources NL

Alternative Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alternative Investment Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alternative Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lake Resources NL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lake Resources NL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alternative Investment and Lake Resources

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

The idea behind Alternative Investment Trust and Lake Resources NL 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.