Correlation Between Liontown Resources and Artemis Resources

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

By analyzing existing cross correlation between Liontown Resources Limited and Artemis Resources, you can compare the effects of market volatilities on Liontown Resources and Artemis Resources 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 Liontown Resources with a short position of Artemis Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontown Resources and Artemis Resources.

Diversification Opportunities for Liontown Resources and Artemis Resources

0.04

Correlation Coefficient

Liontown Resources  Artemis Resources

Significant diversification

The 3 months correlation between Liontown and Artemis is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources Limited and Artemis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artemis Resources and Liontown Resources 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 Liontown Resources Limited are associated (or correlated) with Artemis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artemis Resources has no effect on the direction of Liontown Resources i.e., Liontown Resources and Artemis Resources go up and down completely randomly.

Pair Corralation between Liontown Resources and Artemis Resources

Assuming the 90 days horizon Liontown Resources is expected to generate 55.99 times less return on investment than Artemis Resources. But when comparing it to its historical volatility, Liontown Resources Limited is 21.53 times less risky than Artemis Resources. It trades about 0.07 of its potential returns per unit of risk. Artemis Resources is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Artemis Resources on December 30, 2024 and sell it today you would earn a total of  0.20  from holding Artemis Resources or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Liontown Resources Limited  vs.  Artemis Resources

Liontown Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Liontown Resources Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Liontown Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Artemis Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Artemis Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Artemis Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liontown Resources and Artemis Resources

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

The idea behind Liontown Resources Limited and Artemis Resources 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.