Correlation Between American Lithium and Data Communications

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

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

Diversification Opportunities for American Lithium and Data Communications

-0.21

Correlation Coefficient

American Lithium  Data Communications

Very good diversification

The 3 months correlation between American and Data is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Data Communications Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Communications and American 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 American Lithium Corp are associated (or correlated) with Data Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Communications has no effect on the direction of American Lithium i.e., American Lithium and Data Communications go up and down completely randomly.

Pair Corralation between American Lithium and Data Communications

Given the investment horizon of 90 days American Lithium Corp is expected to under-perform the Data Communications. In addition to that, American Lithium is 1.5 times more volatile than Data Communications Management. It trades about -0.14 of its total potential returns per unit of risk. Data Communications Management is currently generating about 0.01 per unit of volatility. If you would invest  210.00  in Data Communications Management on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Data Communications Management or generate 0.0% return on investment over 90 days.

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

American Lithium Corp  vs.  Data Communications Management

American Lithium Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Lithium Corp 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Data Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Data Communications Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Data Communications may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with American Lithium and Data Communications

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

The idea behind American Lithium Corp and Data Communications Management 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.