Correlation Between American Lithium and Nano One

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

Diversification Opportunities for American Lithium and Nano One

0.89

Correlation Coefficient

American Lithium  Nano One

Very poor diversification

The 3 months correlation between American and Nano is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Nano One Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano One Materials 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 Nano One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano One Materials has no effect on the direction of American Lithium i.e., American Lithium and Nano One go up and down completely randomly.

Pair Corralation between American Lithium and Nano One

Given the investment horizon of 90 days American Lithium Corp is expected to generate 0.96 times more return on investment than Nano One. However, American Lithium Corp is 1.04 times less risky than Nano One. It trades about -0.03 of its potential returns per unit of risk. Nano One Materials is currently generating about -0.06 per unit of risk. If you would invest  54.00  in American Lithium Corp on December 20, 2024 and sell it today you would lose (8.00) from holding American Lithium Corp or give up 14.81% of portfolio value over 90 days.

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

American Lithium Corp  vs.  Nano One Materials

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Nano One Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nano One Materials 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 very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with American Lithium and Nano One

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

The idea behind American Lithium Corp and Nano One Materials 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.