Correlation Between Lithium Ionic and Savannah Resources
Can any of the company-specific risk be diversified away by investing in both Lithium Ionic and Savannah Resources 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 Ionic and Savannah Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Ionic Corp and Savannah Resources Plc, you can compare the effects of market volatilities on Lithium Ionic and Savannah Resources 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 Ionic with a short position of Savannah Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Ionic and Savannah Resources.
Diversification Opportunities for Lithium Ionic and Savannah Resources
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lithium and Savannah is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Ionic Corp and Savannah Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savannah Resources Plc and Lithium Ionic 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 Ionic Corp are associated (or correlated) with Savannah Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savannah Resources Plc has no effect on the direction of Lithium Ionic i.e., Lithium Ionic and Savannah Resources go up and down completely randomly.
Pair Corralation between Lithium Ionic and Savannah Resources
Assuming the 90 days horizon Lithium Ionic is expected to generate 2.72 times less return on investment than Savannah Resources. But when comparing it to its historical volatility, Lithium Ionic Corp is 1.63 times less risky than Savannah Resources. It trades about 0.03 of its potential returns per unit of risk. Savannah Resources Plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.06 in Savannah Resources Plc on December 1, 2024 and sell it today you would earn a total of 0.41 from holding Savannah Resources Plc or generate 10.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.88% |
Values | Daily Returns |
Lithium Ionic Corp vs. Savannah Resources Plc
Performance |
Timeline |
Lithium Ionic Corp |
Savannah Resources Plc |
Lithium Ionic and Savannah Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lithium Ionic and Savannah Resources
The main advantage of trading using opposite Lithium Ionic and Savannah Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Ionic position performs unexpectedly, Savannah Resources 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 Savannah Resources will offset losses from the drop in Savannah Resources' long position.Lithium Ionic vs. IGO Limited | Lithium Ionic vs. Grid Metals Corp | Lithium Ionic vs. First American Silver | Lithium Ionic vs. Qubec Nickel Corp |
Savannah Resources vs. Lithium Energi Exploration | Savannah Resources vs. Critical Elements | Savannah Resources vs. International Battery Metals | Savannah Resources vs. Talga Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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