Correlation Between Core Molding and Arcadium Lithium

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

By analyzing existing cross correlation between Core Molding Technologies and Arcadium Lithium Plc, you can compare the effects of market volatilities on Core Molding and Arcadium 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 Core Molding with a short position of Arcadium Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Molding and Arcadium Lithium.

Diversification Opportunities for Core Molding and Arcadium Lithium

-0.01

Correlation Coefficient

Core Molding  Arcadium Lithium

Good diversification

The 3 months correlation between Core and Arcadium is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Core Molding Technologies and Arcadium Lithium Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadium Lithium Plc and Core Molding 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 Core Molding Technologies are associated (or correlated) with Arcadium Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadium Lithium Plc has no effect on the direction of Core Molding i.e., Core Molding and Arcadium Lithium go up and down completely randomly.

Pair Corralation between Core Molding and Arcadium Lithium

Considering the 90-day investment horizon Core Molding Technologies is expected to under-perform the Arcadium Lithium. In addition to that, Core Molding is 1.68 times more volatile than Arcadium Lithium Plc. It trades about -0.05 of its total potential returns per unit of risk. Arcadium Lithium Plc is currently generating about 0.22 per unit of volatility. If you would invest  514.00  in Arcadium Lithium Plc on December 28, 2024 and sell it today you would earn a total of  70.00  from holding Arcadium Lithium Plc or generate 13.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.77%
Values	Daily Returns

Core Molding Technologies  vs.  Arcadium Lithium Plc

Core Molding Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Core Molding Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Core Molding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Arcadium Lithium Plc

Risk-Adjusted Performance

Solid

Over the last 90 days Arcadium Lithium Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unsteady basic indicators, Arcadium Lithium displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Core Molding and Arcadium Lithium

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

The idea behind Core Molding Technologies and Arcadium Lithium Plc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.