Correlation Between Flinders Resources and Lithium Americas

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Can any of the company-specific risk be diversified away by investing in both Flinders Resources and Lithium Americas 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 Flinders Resources and Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flinders Resources Limited and Lithium Americas Corp, you can compare the effects of market volatilities on Flinders Resources and Lithium Americas 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 Flinders Resources with a short position of Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flinders Resources and Lithium Americas.

Diversification Opportunities for Flinders Resources and Lithium Americas

FlindersLithiumDiversified AwayFlindersLithiumDiversified Away100%
-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Flinders and Lithium is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Flinders Resources Limited and Lithium Americas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Americas Corp and Flinders Resources 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 Flinders Resources Limited are associated (or correlated) with Lithium Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Americas Corp has no effect on the direction of Flinders Resources i.e., Flinders Resources and Lithium Americas go up and down completely randomly.

Pair Corralation between Flinders Resources and Lithium Americas

Assuming the 90 days horizon Flinders Resources Limited is expected to generate 1.34 times more return on investment than Lithium Americas. However, Flinders Resources is 1.34 times more volatile than Lithium Americas Corp. It trades about 0.12 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about -0.11 per unit of risk. If you would invest  417.00  in Flinders Resources Limited on November 22, 2024 and sell it today you would earn a total of  123.00  from holding Flinders Resources Limited or generate 29.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Flinders Resources Limited  vs.  Lithium Americas Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010203040
JavaScript chart by amCharts 3.21.15FDR LAC
       Timeline  
Flinders Resources 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Flinders Resources Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Flinders Resources showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb44.555.56
Lithium Americas Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Lithium Americas Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb4.555.5

Flinders Resources and Lithium Americas Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.95-9.7-6.45-3.2-0.05423.346.810.2613.7217.18 0.0100.0150.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15FDR LAC
       Returns  

Pair Trading with Flinders Resources and Lithium Americas

The main advantage of trading using opposite Flinders Resources and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flinders Resources position performs unexpectedly, Lithium Americas 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 Lithium Americas will offset losses from the drop in Lithium Americas' long position.
The idea behind Flinders Resources Limited and Lithium Americas 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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