Correlation Between Lithium Americas and Progressive Planet

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

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

Diversification Opportunities for Lithium Americas and Progressive Planet

-0.34

Correlation Coefficient

Lithium Americas  Progressive Planet

Very good diversification

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

Pair Corralation between Lithium Americas and Progressive Planet

Considering the 90-day investment horizon Lithium Americas Corp is expected to under-perform the Progressive Planet. But the stock apears to be less risky and, when comparing its historical volatility, Lithium Americas Corp is 1.07 times less risky than Progressive Planet. The stock trades about -0.06 of its potential returns per unit of risk. The Progressive Planet Solutions is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Progressive Planet Solutions on October 27, 2024 and sell it today you would lose (9.00) from holding Progressive Planet Solutions or give up 42.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.28%
Values	Daily Returns

Lithium Americas Corp  vs.  Progressive Planet Solutions

Lithium Americas Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lithium Americas Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Progressive Planet

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Planet Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Progressive Planet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lithium Americas and Progressive Planet

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

The idea behind Lithium Americas Corp and Progressive Planet Solutions 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.