Correlation Between Foremost Lithium and CT Real

Can any of the company-specific risk be diversified away by investing in both Foremost Lithium and CT Real 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 CT Real 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 CT Real Estate, you can compare the effects of market volatilities on Foremost Lithium and CT Real 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 CT Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foremost Lithium and CT Real.

Diversification Opportunities for Foremost Lithium and CT Real

0.27

Correlation Coefficient

Foremost Lithium  CT Real

Modest diversification

The 3 months correlation between Foremost and CTRRF is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Foremost Lithium Resource and CT Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CT Real Estate 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 CT Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CT Real Estate has no effect on the direction of Foremost Lithium i.e., Foremost Lithium and CT Real go up and down completely randomly.

Pair Corralation between Foremost Lithium and CT Real

Assuming the 90 days horizon Foremost Lithium Resource is expected to generate 5.94 times more return on investment than CT Real. However, Foremost Lithium is 5.94 times more volatile than CT Real Estate. It trades about 0.09 of its potential returns per unit of risk. CT Real Estate is currently generating about -0.03 per unit of risk. If you would invest  31.00  in Foremost Lithium Resource on September 2, 2024 and sell it today you would earn a total of  1.00  from holding Foremost Lithium Resource or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	44.44%
Values	Daily Returns

Foremost Lithium Resource  vs.  CT Real Estate

Foremost Lithium Resource

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Foremost Lithium Resource are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Foremost Lithium showed solid returns over the last few months and may actually be approaching a breakup point.

CT Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Foremost Lithium and CT Real

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

The idea behind Foremost Lithium Resource and CT Real Estate 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.