Correlation Between International Lithium and Infinite Ore

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

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

Diversification Opportunities for International Lithium and Infinite Ore

0.36

Correlation Coefficient

International Lithium  Infinite Ore

Weak diversification

The 3 months correlation between International and Infinite is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding International Lithium Corp and Infinite Ore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinite Ore Corp and International 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 International Lithium Corp are associated (or correlated) with Infinite Ore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinite Ore Corp has no effect on the direction of International Lithium i.e., International Lithium and Infinite Ore go up and down completely randomly.

Pair Corralation between International Lithium and Infinite Ore

Assuming the 90 days horizon International Lithium Corp is expected to generate 1.03 times more return on investment than Infinite Ore. However, International Lithium is 1.03 times more volatile than Infinite Ore Corp. It trades about 0.05 of its potential returns per unit of risk. Infinite Ore Corp is currently generating about -0.08 per unit of risk. If you would invest  1.12  in International Lithium Corp on October 11, 2024 and sell it today you would lose (0.02) from holding International Lithium Corp or give up 1.79% of portfolio value over 90 days.

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

International Lithium Corp  vs.  Infinite Ore Corp

International Lithium

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Lithium Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, International Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Infinite Ore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infinite Ore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 International Lithium and Infinite Ore

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

The idea behind International Lithium Corp and Infinite Ore 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.