Correlation Between American Lithium and St Georges

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

By analyzing existing cross correlation between American Lithium Minerals and St Georges Eco Mining Corp, you can compare the effects of market volatilities on American Lithium and St Georges 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 St Georges. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and St Georges.

Diversification Opportunities for American Lithium and St Georges

-0.21

Correlation Coefficient

American Lithium  St Georges

Very good diversification

The 3 months correlation between American and SXOOF is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Minerals and St Georges Eco Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Georges Eco 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 Minerals are associated (or correlated) with St Georges. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Georges Eco has no effect on the direction of American Lithium i.e., American Lithium and St Georges go up and down completely randomly.

Pair Corralation between American Lithium and St Georges

Given the investment horizon of 90 days American Lithium Minerals is expected to generate 1.31 times more return on investment than St Georges. However, American Lithium is 1.31 times more volatile than St Georges Eco Mining Corp. It trades about 0.03 of its potential returns per unit of risk. St Georges Eco Mining Corp is currently generating about 0.01 per unit of risk. If you would invest  14.00  in American Lithium Minerals on October 21, 2024 and sell it today you would lose (10.34) from holding American Lithium Minerals or give up 73.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

American Lithium Minerals  vs.  St Georges Eco Mining Corp

American Lithium Minerals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Lithium Minerals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, American Lithium displayed solid returns over the last few months and may actually be approaching a breakup point.

St Georges Eco

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in St Georges Eco Mining Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, St Georges reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Lithium and St Georges

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

The idea behind American Lithium Minerals and St Georges Eco Mining 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.