Correlation Between Lithium Royalty and Viemed Healthcare

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

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

Diversification Opportunities for Lithium Royalty and Viemed Healthcare

0.72

Correlation Coefficient

Lithium Royalty  Viemed Healthcare

Poor diversification

The 3 months correlation between Lithium and Viemed is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Royalty Corp and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare and Lithium Royalty 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 Lithium Royalty Corp are associated (or correlated) with Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of Lithium Royalty i.e., Lithium Royalty and Viemed Healthcare go up and down completely randomly.

Pair Corralation between Lithium Royalty and Viemed Healthcare

Assuming the 90 days horizon Lithium Royalty Corp is expected to generate 1.62 times more return on investment than Viemed Healthcare. However, Lithium Royalty is 1.62 times more volatile than Viemed Healthcare. It trades about -0.01 of its potential returns per unit of risk. Viemed Healthcare is currently generating about -0.09 per unit of risk. If you would invest  380.00  in Lithium Royalty Corp on December 29, 2024 and sell it today you would lose (12.00) from holding Lithium Royalty Corp or give up 3.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Lithium Royalty Corp  vs.  Viemed Healthcare

Lithium Royalty Corp

Risk-Adjusted Performance

Very Weak

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

Viemed Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viemed Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lithium Royalty and Viemed Healthcare

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

The idea behind Lithium Royalty Corp and Viemed Healthcare 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.