Correlation Between Global Helium and Lomiko Metals

Can any of the company-specific risk be diversified away by investing in both Global Helium and Lomiko Metals 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 Global Helium and Lomiko Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Helium Corp and Lomiko Metals, you can compare the effects of market volatilities on Global Helium and Lomiko Metals 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 Global Helium with a short position of Lomiko Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Helium and Lomiko Metals.

Diversification Opportunities for Global Helium and Lomiko Metals

0.47

Correlation Coefficient

Global Helium  Lomiko Metals

Very weak diversification

The 3 months correlation between Global and Lomiko is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Global Helium Corp and Lomiko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lomiko Metals and Global Helium 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 Global Helium Corp are associated (or correlated) with Lomiko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lomiko Metals has no effect on the direction of Global Helium i.e., Global Helium and Lomiko Metals go up and down completely randomly.

Pair Corralation between Global Helium and Lomiko Metals

Assuming the 90 days horizon Global Helium Corp is expected to generate 2.01 times more return on investment than Lomiko Metals. However, Global Helium is 2.01 times more volatile than Lomiko Metals. It trades about 0.03 of its potential returns per unit of risk. Lomiko Metals is currently generating about -0.13 per unit of risk. If you would invest  5.18  in Global Helium Corp on September 3, 2024 and sell it today you would lose (1.56) from holding Global Helium Corp or give up 30.12% of portfolio value over 90 days.

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

Global Helium Corp  vs.  Lomiko Metals

Global Helium Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Helium Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Helium reported solid returns over the last few months and may actually be approaching a breakup point.

Lomiko Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Global Helium and Lomiko Metals

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

The idea behind Global Helium Corp and Lomiko Metals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.