Correlation Between K2 Asset and Core Lithium
Can any of the company-specific risk be diversified away by investing in both K2 Asset and Core 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 K2 Asset and Core Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Asset Management and Core Lithium, you can compare the effects of market volatilities on K2 Asset and Core 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 K2 Asset with a short position of Core Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and Core Lithium.
Diversification Opportunities for K2 Asset and Core Lithium
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KAM and Core is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium and K2 Asset 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 K2 Asset Management are associated (or correlated) with Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of K2 Asset i.e., K2 Asset and Core Lithium go up and down completely randomly.
Pair Corralation between K2 Asset and Core Lithium
Assuming the 90 days trading horizon K2 Asset Management is expected to generate 0.96 times more return on investment than Core Lithium. However, K2 Asset Management is 1.04 times less risky than Core Lithium. It trades about 0.05 of its potential returns per unit of risk. Core Lithium is currently generating about -0.08 per unit of risk. If you would invest 3.88 in K2 Asset Management on October 3, 2024 and sell it today you would earn a total of 3.22 from holding K2 Asset Management or generate 82.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
K2 Asset Management vs. Core Lithium
Performance |
Timeline |
K2 Asset Management |
Core Lithium |
K2 Asset and Core Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with K2 Asset and Core Lithium
The main advantage of trading using opposite K2 Asset and Core Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset position performs unexpectedly, Core 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 Core Lithium will offset losses from the drop in Core Lithium's long position.K2 Asset vs. Aneka Tambang Tbk | K2 Asset vs. Rio Tinto | K2 Asset vs. BHP Group Limited | K2 Asset vs. Block Inc |
Core Lithium vs. Northern Star Resources | Core Lithium vs. Evolution Mining | Core Lithium vs. Bluescope Steel | Core Lithium vs. Sandfire Resources NL |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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