Correlation Between WESANA HEALTH and E3 LITHIUM

Can any of the company-specific risk be diversified away by investing in both WESANA HEALTH and E3 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 WESANA HEALTH and E3 LITHIUM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WESANA HEALTH HOLD and E3 LITHIUM LTD, you can compare the effects of market volatilities on WESANA HEALTH and E3 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 WESANA HEALTH with a short position of E3 LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESANA HEALTH and E3 LITHIUM.

Diversification Opportunities for WESANA HEALTH and E3 LITHIUM

0.0

Correlation Coefficient

WESANA HEALTH  E3 LITHIUM

Pay attention - limited upside

The 3 months correlation between WESANA and OW3 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WESANA HEALTH HOLD and E3 LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E3 LITHIUM LTD and WESANA HEALTH 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 WESANA HEALTH HOLD are associated (or correlated) with E3 LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E3 LITHIUM LTD has no effect on the direction of WESANA HEALTH i.e., WESANA HEALTH and E3 LITHIUM go up and down completely randomly.

Pair Corralation between WESANA HEALTH and E3 LITHIUM

If you would invest  0.15  in WESANA HEALTH HOLD on October 26, 2024 and sell it today you would earn a total of  0.00  from holding WESANA HEALTH HOLD or generate 0.0% return on investment over 90 days.

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

WESANA HEALTH HOLD  vs.  E3 LITHIUM LTD

WESANA HEALTH HOLD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESANA HEALTH HOLD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, WESANA HEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

E3 LITHIUM LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E3 LITHIUM LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with WESANA HEALTH and E3 LITHIUM

The main advantage of trading using opposite WESANA HEALTH and E3 LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESANA HEALTH position performs unexpectedly, E3 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 E3 LITHIUM will offset losses from the drop in E3 LITHIUM's long position.

The idea behind WESANA HEALTH HOLD and E3 LITHIUM LTD 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.