Correlation Between Lake Resources and Norvista Capital

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

Diversification Opportunities for Lake Resources and Norvista Capital

0.0

Correlation Coefficient

Lake Resources  Norvista Capital

Pay attention - limited upside

The 3 months correlation between Lake and Norvista is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Norvista Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norvista Capital 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 Norvista Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norvista Capital has no effect on the direction of Lake Resources i.e., Lake Resources and Norvista Capital go up and down completely randomly.

Pair Corralation between Lake Resources and Norvista Capital

If you would invest  2.60  in Lake Resources NL on December 21, 2024 and sell it today you would lose (0.23) from holding Lake Resources NL or give up 8.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Lake Resources NL  vs.  Norvista Capital

Lake Resources NL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lake Resources NL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Lake Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Norvista Capital

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Lake Resources and Norvista Capital

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

The idea behind Lake Resources NL and Norvista Capital 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.