Correlation Between Altura Mining and Lithium Corp

Can any of the company-specific risk be diversified away by investing in both Altura Mining and Lithium Corp 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 Altura Mining and Lithium Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altura Mining Limited and Lithium Corp, you can compare the effects of market volatilities on Altura Mining and Lithium Corp 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 Altura Mining with a short position of Lithium Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altura Mining and Lithium Corp.

Diversification Opportunities for Altura Mining and Lithium Corp

0.12

Correlation Coefficient

Altura Mining  Lithium Corp

Average diversification

The 3 months correlation between Altura and Lithium is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Altura Mining Limited and Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Corp and Altura Mining 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 Altura Mining Limited are associated (or correlated) with Lithium Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Corp has no effect on the direction of Altura Mining i.e., Altura Mining and Lithium Corp go up and down completely randomly.

Pair Corralation between Altura Mining and Lithium Corp

Assuming the 90 days horizon Altura Mining Limited is expected to generate 4.13 times more return on investment than Lithium Corp. However, Altura Mining is 4.13 times more volatile than Lithium Corp. It trades about 0.19 of its potential returns per unit of risk. Lithium Corp is currently generating about -0.11 per unit of risk. If you would invest  0.56  in Altura Mining Limited on December 20, 2024 and sell it today you would earn a total of  1.74  from holding Altura Mining Limited or generate 310.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Altura Mining Limited  vs.  Lithium Corp

Altura Mining Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Mining Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altura Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Lithium Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Altura Mining and Lithium Corp

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

The idea behind Altura Mining Limited and Lithium 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.