Correlation Between US Lithium and Amexdrug

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

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

Diversification Opportunities for US Lithium and Amexdrug

1.0

Correlation Coefficient

US Lithium  Amexdrug

No risk reduction

The 3 months correlation between LITH and Amexdrug is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding US Lithium Corp and Amexdrug in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amexdrug and US 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 US Lithium Corp are associated (or correlated) with Amexdrug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amexdrug has no effect on the direction of US Lithium i.e., US Lithium and Amexdrug go up and down completely randomly.

Pair Corralation between US Lithium and Amexdrug

If you would invest  0.20  in Amexdrug on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Amexdrug or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

US Lithium Corp  vs.  Amexdrug

US Lithium Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, US Lithium is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Amexdrug

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amexdrug has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amexdrug is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with US Lithium and Amexdrug

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

The idea behind US Lithium Corp and Amexdrug 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.