Correlation Between Lake Resources and Nevada Sunrise

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

Diversification Opportunities for Lake Resources and Nevada Sunrise

LakeNevadaDiversified AwayLakeNevadaDiversified Away100%
0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Lake and Nevada is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Nevada Sunrise Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nevada Sunrise Gold 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 Nevada Sunrise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nevada Sunrise Gold has no effect on the direction of Lake Resources i.e., Lake Resources and Nevada Sunrise go up and down completely randomly.

Pair Corralation between Lake Resources and Nevada Sunrise

Assuming the 90 days horizon Lake Resources is expected to generate 3.24 times less return on investment than Nevada Sunrise. In addition to that, Lake Resources is 1.79 times more volatile than Nevada Sunrise Gold. It trades about 0.02 of its total potential returns per unit of risk. Nevada Sunrise Gold is currently generating about 0.11 per unit of volatility. If you would invest  1.00  in Nevada Sunrise Gold on November 22, 2024 and sell it today you would earn a total of  0.08  from holding Nevada Sunrise Gold or generate 8.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Lake Resources NL  vs.  Nevada Sunrise Gold

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-10010
JavaScript chart by amCharts 3.21.15LLKKF NVSGF
       Timeline  
Lake Resources NL 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Lake Resources NL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.0250.030.0350.04
Nevada Sunrise Gold 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Nevada Sunrise Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Nevada Sunrise may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.0080.010.0120.0140.0160.0180.02

Lake Resources and Nevada Sunrise Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.0-7.49-4.98-2.47-0.04092.414.867.319.76 0.010.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15LLKKF NVSGF
       Returns  

Pair Trading with Lake Resources and Nevada Sunrise

The main advantage of trading using opposite Lake Resources and Nevada Sunrise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources position performs unexpectedly, Nevada Sunrise 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 Nevada Sunrise will offset losses from the drop in Nevada Sunrise's long position.
The idea behind Lake Resources NL and Nevada Sunrise 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.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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