Correlation Between Lithium Power and Lake Resources

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

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

Diversification Opportunities for Lithium Power and Lake Resources

0.0

Correlation Coefficient

Lithium Power  Lake Resources

Pay attention - limited upside

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

Pair Corralation between Lithium Power and Lake Resources

If you would invest  2.59  in Lake Resources NL on December 29, 2024 and sell it today you would lose (0.27) from holding Lake Resources NL or give up 10.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lithium Power International  vs.  Lake Resources NL

Lithium Power Intern

Risk-Adjusted Performance

Very Weak

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

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 uncertain forward-looking signals, Lake Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lithium Power and Lake Resources

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

The idea behind Lithium Power International and Lake Resources NL 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.