Correlation Between Foremost Lithium and Biglari Holdings

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

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

Diversification Opportunities for Foremost Lithium and Biglari Holdings

-0.87

Correlation Coefficient

Foremost Lithium  Biglari Holdings

Pay attention - limited upside

The 3 months correlation between Foremost and Biglari is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Foremost Lithium Resource and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Foremost 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 Foremost Lithium Resource are associated (or correlated) with Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of Foremost Lithium i.e., Foremost Lithium and Biglari Holdings go up and down completely randomly.

Pair Corralation between Foremost Lithium and Biglari Holdings

Given the investment horizon of 90 days Foremost Lithium Resource is expected to generate 6.04 times more return on investment than Biglari Holdings. However, Foremost Lithium is 6.04 times more volatile than Biglari Holdings. It trades about 0.12 of its potential returns per unit of risk. Biglari Holdings is currently generating about -0.32 per unit of risk. If you would invest  119.00  in Foremost Lithium Resource on October 22, 2024 and sell it today you would earn a total of  21.00  from holding Foremost Lithium Resource or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Foremost Lithium Resource  vs.  Biglari Holdings

Foremost Lithium Resource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foremost Lithium Resource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Biglari Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Foremost Lithium and Biglari Holdings

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

The idea behind Foremost Lithium Resource and Biglari Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.