Correlation Between Core Lithium and Hotel Property

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

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

Diversification Opportunities for Core Lithium and Hotel Property

-0.3

Correlation Coefficient

Core Lithium  Hotel Property

Very good diversification

The 3 months correlation between Core and Hotel is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Core Lithium and Hotel Property Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Property Inves and Core 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 Core Lithium are associated (or correlated) with Hotel Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Property Inves has no effect on the direction of Core Lithium i.e., Core Lithium and Hotel Property go up and down completely randomly.

Pair Corralation between Core Lithium and Hotel Property

Assuming the 90 days trading horizon Core Lithium is expected to under-perform the Hotel Property. In addition to that, Core Lithium is 14.09 times more volatile than Hotel Property Investments. It trades about -0.05 of its total potential returns per unit of risk. Hotel Property Investments is currently generating about -0.07 per unit of volatility. If you would invest  376.00  in Hotel Property Investments on December 5, 2024 and sell it today you would lose (1.00) from holding Hotel Property Investments or give up 0.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Core Lithium  vs.  Hotel Property Investments

Core Lithium

Risk-Adjusted Performance

Very Weak

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

Hotel Property Inves

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Property Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Hotel Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Core Lithium and Hotel Property

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

The idea behind Core Lithium and Hotel Property Investments 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.