Correlation Between Aion Therapeutic and US Lithium

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

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

Diversification Opportunities for Aion Therapeutic and US Lithium

0.0

Correlation Coefficient

Aion Therapeutic  US Lithium

Pay attention - limited upside

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

Pair Corralation between Aion Therapeutic and US Lithium

If you would invest  0.68  in Aion Therapeutic on September 13, 2024 and sell it today you would lose (0.27) from holding Aion Therapeutic or give up 39.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aion Therapeutic  vs.  US Lithium Corp

Aion Therapeutic

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aion Therapeutic are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Aion Therapeutic reported solid returns over the last few months and may actually be approaching a breakup point.

US Lithium Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aion Therapeutic and US Lithium

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

The idea behind Aion Therapeutic and US 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.