Correlation Between Aloro Mining and International Lithium

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

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

Diversification Opportunities for Aloro Mining and International Lithium

0.17

Correlation Coefficient

Aloro Mining  International Lithium

Average diversification

The 3 months correlation between Aloro and International is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aloro Mining Corp and International Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Lithium and Aloro 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 Aloro Mining Corp are associated (or correlated) with International Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Lithium has no effect on the direction of Aloro Mining i.e., Aloro Mining and International Lithium go up and down completely randomly.

Pair Corralation between Aloro Mining and International Lithium

Assuming the 90 days trading horizon Aloro Mining Corp is expected to under-perform the International Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Aloro Mining Corp is 2.37 times less risky than International Lithium. The stock trades about -0.13 of its potential returns per unit of risk. The International Lithium Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.50  in International Lithium Corp on September 12, 2024 and sell it today you would earn a total of  0.00  from holding International Lithium Corp or generate 0.0% return on investment over 90 days.

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

Aloro Mining Corp  vs.  International Lithium Corp

Aloro Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aloro Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

International Lithium

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Lithium Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, International Lithium showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aloro Mining and International Lithium

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

The idea behind Aloro Mining Corp and International 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.