Correlation Between Lake Resources and Argosy Minerals
Can any of the company-specific risk be diversified away by investing in both Lake Resources and Argosy Minerals 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 Lake Resources and Argosy Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lake Resources NL and Argosy Minerals Limited, you can compare the effects of market volatilities on Lake Resources and Argosy Minerals 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 Lake Resources with a short position of Argosy Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Argosy Minerals.
Diversification Opportunities for Lake Resources and Argosy Minerals
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lake and Argosy is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Argosy Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argosy Minerals and Lake 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 Lake Resources NL are associated (or correlated) with Argosy Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argosy Minerals has no effect on the direction of Lake Resources i.e., Lake Resources and Argosy Minerals go up and down completely randomly.
Pair Corralation between Lake Resources and Argosy Minerals
Assuming the 90 days horizon Lake Resources is expected to generate 1.09 times less return on investment than Argosy Minerals. But when comparing it to its historical volatility, Lake Resources NL is 1.36 times less risky than Argosy Minerals. It trades about 0.03 of its potential returns per unit of risk. Argosy Minerals Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1.71 in Argosy Minerals Limited on December 28, 2024 and sell it today you would lose (0.33) from holding Argosy Minerals Limited or give up 19.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.39% |
Values | Daily Returns |
Lake Resources NL vs. Argosy Minerals Limited
Performance |
Timeline |
Lake Resources NL |
Argosy Minerals |
Lake Resources and Argosy Minerals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lake Resources and Argosy Minerals
The main advantage of trading using opposite Lake Resources and Argosy Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources position performs unexpectedly, Argosy Minerals 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 Argosy Minerals will offset losses from the drop in Argosy Minerals' long position.Lake Resources vs. DR Horton | Lake Resources vs. Beauty Health Co | Lake Resources vs. Stanley Black Decker | Lake Resources vs. Meritage |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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