Correlation Between Liontown Resources and Stone Gold

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

Diversification Opportunities for Liontown Resources and Stone Gold

0.0

Correlation Coefficient

Liontown Resources  Stone Gold

Pay attention - limited upside

The 3 months correlation between Liontown and Stone is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources Limited and Stone Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Gold 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 Stone Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Gold has no effect on the direction of Liontown Resources i.e., Liontown Resources and Stone Gold go up and down completely randomly.

Pair Corralation between Liontown Resources and Stone Gold

If you would invest  1.00  in Stone Gold on November 20, 2024 and sell it today you would earn a total of  0.00  from holding Stone Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Liontown Resources Limited  vs.  Stone Gold

Liontown Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liontown Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Stone Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stone Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Stone Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Liontown Resources and Stone Gold

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

The idea behind Liontown Resources Limited and Stone Gold 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.