Correlation Between Snow Lake and Core Lithium

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

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

Diversification Opportunities for Snow Lake and Core Lithium

0.38

Correlation Coefficient

Snow Lake  Core Lithium

Weak diversification

The 3 months correlation between Snow and Core is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Snow Lake Resources and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium and Snow Lake 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 Snow Lake Resources are associated (or correlated) with Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Snow Lake i.e., Snow Lake and Core Lithium go up and down completely randomly.

Pair Corralation between Snow Lake and Core Lithium

Given the investment horizon of 90 days Snow Lake Resources is expected to under-perform the Core Lithium. In addition to that, Snow Lake is 1.16 times more volatile than Core Lithium. It trades about -0.07 of its total potential returns per unit of risk. Core Lithium is currently generating about 0.04 per unit of volatility. If you would invest  5.55  in Core Lithium on December 27, 2024 and sell it today you would lose (0.55) from holding Core Lithium or give up 9.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Snow Lake Resources  vs.  Core Lithium

Snow Lake Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Snow Lake Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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.

Core Lithium

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Core Lithium are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Core Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Snow Lake and Core Lithium

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

The idea behind Snow Lake Resources and Core Lithium 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .