Correlation Between IperionX Limited and Atlas Lithium

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

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

Diversification Opportunities for IperionX Limited and Atlas Lithium

0.03

Correlation Coefficient

IperionX Limited  Atlas Lithium

Significant diversification

The 3 months correlation between IperionX and Atlas is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding IperionX Limited American and Atlas Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Lithium and IperionX Limited 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 IperionX Limited American are associated (or correlated) with Atlas Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Lithium has no effect on the direction of IperionX Limited i.e., IperionX Limited and Atlas Lithium go up and down completely randomly.

Pair Corralation between IperionX Limited and Atlas Lithium

Considering the 90-day investment horizon IperionX Limited American is expected to generate 1.09 times more return on investment than Atlas Lithium. However, IperionX Limited is 1.09 times more volatile than Atlas Lithium. It trades about 0.02 of its potential returns per unit of risk. Atlas Lithium is currently generating about -0.08 per unit of risk. If you would invest  2,608  in IperionX Limited American on November 20, 2024 and sell it today you would lose (9.00) from holding IperionX Limited American or give up 0.35% of portfolio value over 90 days.

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

IperionX Limited American  vs.  Atlas Lithium

IperionX Limited American

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IperionX Limited American are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, IperionX Limited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Atlas Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atlas 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 essential indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with IperionX Limited and Atlas Lithium

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

The idea behind IperionX Limited American and Atlas Lithium 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.