Correlation Between Lithium Australia and Graphex Group

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

By analyzing existing cross correlation between Lithium Australia NL and Graphex Group Limited, you can compare the effects of market volatilities on Lithium Australia and Graphex Group 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 Australia with a short position of Graphex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Australia and Graphex Group.

Diversification Opportunities for Lithium Australia and Graphex Group

0.47

Correlation Coefficient

Lithium Australia  Graphex Group

Very weak diversification

The 3 months correlation between Lithium and Graphex is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Australia NL and Graphex Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphex Group Limited and Lithium Australia 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 Australia NL are associated (or correlated) with Graphex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphex Group Limited has no effect on the direction of Lithium Australia i.e., Lithium Australia and Graphex Group go up and down completely randomly.

Pair Corralation between Lithium Australia and Graphex Group

Assuming the 90 days horizon Lithium Australia NL is expected to under-perform the Graphex Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lithium Australia NL is 1.13 times less risky than Graphex Group. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Graphex Group Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  160.00  in Graphex Group Limited on December 29, 2024 and sell it today you would lose (53.00) from holding Graphex Group Limited or give up 33.12% of portfolio value over 90 days.

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

Lithium Australia NL  vs.  Graphex Group Limited

Lithium Australia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lithium Australia NL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Graphex Group Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Graphex Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lithium Australia and Graphex Group

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

The idea behind Lithium Australia NL and Graphex Group Limited 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.