Correlation Between Kenorland Minerals and Lithium Americas

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

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

Diversification Opportunities for Kenorland Minerals and Lithium Americas

-0.25

Correlation Coefficient

Kenorland Minerals  Lithium Americas

Very good diversification

The 3 months correlation between Kenorland and Lithium is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kenorland Minerals and Lithium Americas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Americas Corp and Kenorland Minerals 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 Kenorland Minerals are associated (or correlated) with Lithium Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Americas Corp has no effect on the direction of Kenorland Minerals i.e., Kenorland Minerals and Lithium Americas go up and down completely randomly.

Pair Corralation between Kenorland Minerals and Lithium Americas

Assuming the 90 days horizon Kenorland Minerals is expected to under-perform the Lithium Americas. But the otc stock apears to be less risky and, when comparing its historical volatility, Kenorland Minerals is 1.22 times less risky than Lithium Americas. The otc stock trades about -0.02 of its potential returns per unit of risk. The Lithium Americas Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  333.00  in Lithium Americas Corp on October 22, 2024 and sell it today you would earn a total of  16.00  from holding Lithium Americas Corp or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Kenorland Minerals  vs.  Lithium Americas Corp

Kenorland Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kenorland Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Kenorland Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lithium Americas Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lithium Americas Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Lithium Americas may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kenorland Minerals and Lithium Americas

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

The idea behind Kenorland Minerals and Lithium Americas 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.