Correlation Between American Lithium and Giga Metals

Can any of the company-specific risk be diversified away by investing in both American Lithium and Giga Metals 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 Giga Metals 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 Giga Metals Corp, you can compare the effects of market volatilities on American Lithium and Giga Metals 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 Giga Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Giga Metals.

Diversification Opportunities for American Lithium and Giga Metals

-0.21

Correlation Coefficient

American Lithium  Giga Metals

Very good diversification

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

Pair Corralation between American Lithium and Giga Metals

Given the investment horizon of 90 days American Lithium Corp is expected to under-perform the Giga Metals. In addition to that, American Lithium is 1.32 times more volatile than Giga Metals Corp. It trades about -0.07 of its total potential returns per unit of risk. Giga Metals Corp is currently generating about -0.02 per unit of volatility. If you would invest  12.00  in Giga Metals Corp on December 29, 2024 and sell it today you would lose (1.00) from holding Giga Metals Corp or give up 8.33% of portfolio value over 90 days.

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

American Lithium Corp  vs.  Giga Metals Corp

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 unfluctuating 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.

Giga Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Giga Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Giga Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with American Lithium and Giga Metals

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

The idea behind American Lithium Corp and Giga Metals 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.