Correlation Between Crinetics Pharmaceuticals and US Lithium

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

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

Diversification Opportunities for Crinetics Pharmaceuticals and US Lithium

0.0

Correlation Coefficient

Crinetics Pharmaceuticals  US Lithium

Pay attention - limited upside

The 3 months correlation between Crinetics and LITH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals i.e., Crinetics Pharmaceuticals and US Lithium go up and down completely randomly.

Pair Corralation between Crinetics Pharmaceuticals and US Lithium

Given the investment horizon of 90 days Crinetics Pharmaceuticals is expected to generate 0.95 times more return on investment than US Lithium. However, Crinetics Pharmaceuticals is 1.05 times less risky than US Lithium. It trades about 0.08 of its potential returns per unit of risk. US Lithium Corp is currently generating about 0.05 per unit of risk. If you would invest  1,625  in Crinetics Pharmaceuticals on September 3, 2024 and sell it today you would earn a total of  4,095  from holding Crinetics Pharmaceuticals or generate 252.0% return on investment over 90 days.

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

Crinetics Pharmaceuticals  vs.  US Lithium Corp

Crinetics Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crinetics Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Crinetics Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Crinetics Pharmaceuticals and US Lithium

The main advantage of trading using opposite Crinetics Pharmaceuticals and US Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.