Correlation Between Imagine Lithium and Aloro Mining

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

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

Diversification Opportunities for Imagine Lithium and Aloro Mining

0.34

Correlation Coefficient

Imagine Lithium  Aloro Mining

Weak diversification

The 3 months correlation between Imagine and Aloro is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Imagine Lithium and Aloro Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aloro Mining Corp and Imagine 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 Imagine Lithium are associated (or correlated) with Aloro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aloro Mining Corp has no effect on the direction of Imagine Lithium i.e., Imagine Lithium and Aloro Mining go up and down completely randomly.

Pair Corralation between Imagine Lithium and Aloro Mining

Assuming the 90 days horizon Imagine Lithium is expected to generate 1.88 times more return on investment than Aloro Mining. However, Imagine Lithium is 1.88 times more volatile than Aloro Mining Corp. It trades about -0.03 of its potential returns per unit of risk. Aloro Mining Corp is currently generating about -0.13 per unit of risk. If you would invest  4.00  in Imagine Lithium on September 4, 2024 and sell it today you would lose (2.00) from holding Imagine Lithium or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Imagine Lithium  vs.  Aloro Mining Corp

Imagine Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imagine Lithium 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 basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Aloro Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aloro Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Imagine Lithium and Aloro Mining

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

The idea behind Imagine Lithium and Aloro Mining 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.