Correlation Between American Lithium and Global Helium

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

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

Diversification Opportunities for American Lithium and Global Helium

0.0

Correlation Coefficient

American Lithium  Global Helium

Pay attention - limited upside

The 3 months correlation between American and Global is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Global Helium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Helium Corp and American Lithium 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 Lithium Corp are associated (or correlated) with Global Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Helium Corp has no effect on the direction of American Lithium i.e., American Lithium and Global Helium go up and down completely randomly.

Pair Corralation between American Lithium and Global Helium

If you would invest  2.65  in Global Helium Corp on December 29, 2024 and sell it today you would lose (0.15) from holding Global Helium Corp or give up 5.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

American Lithium Corp  vs.  Global Helium Corp

American Lithium Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, American Lithium is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Global Helium Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Helium Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Helium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Lithium and Global Helium

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

The idea behind American Lithium Corp and Global Helium 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.