Correlation Between Core Lithium and Industrias Penoles

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

By analyzing existing cross correlation between Core Lithium and Industrias Penoles Sab, you can compare the effects of market volatilities on Core Lithium and Industrias Penoles 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 Industrias Penoles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Lithium and Industrias Penoles.

Diversification Opportunities for Core Lithium and Industrias Penoles

-0.34

Correlation Coefficient

Core Lithium  Industrias Penoles

Very good diversification

The 3 months correlation between Core and Industrias is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Core Lithium and Industrias Penoles Sab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrias Penoles Sab 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 Industrias Penoles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrias Penoles Sab has no effect on the direction of Core Lithium i.e., Core Lithium and Industrias Penoles go up and down completely randomly.

Pair Corralation between Core Lithium and Industrias Penoles

Assuming the 90 days horizon Core Lithium is expected to generate 1.22 times less return on investment than Industrias Penoles. In addition to that, Core Lithium is 2.53 times more volatile than Industrias Penoles Sab. It trades about 0.05 of its total potential returns per unit of risk. Industrias Penoles Sab is currently generating about 0.16 per unit of volatility. If you would invest  1,250  in Industrias Penoles Sab on December 30, 2024 and sell it today you would earn a total of  520.00  from holding Industrias Penoles Sab or generate 41.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Core Lithium  vs.  Industrias Penoles Sab

Core Lithium

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Core Lithium are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Core Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Industrias Penoles Sab

Risk-Adjusted Performance

Good

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

Pair Trading with Core Lithium and Industrias Penoles

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

The idea behind Core Lithium and Industrias Penoles Sab 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.