Correlation Between Liontown Resources and Pinnacle Investment

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

By analyzing existing cross correlation between Liontown Resources and Pinnacle Investment Management, you can compare the effects of market volatilities on Liontown Resources and Pinnacle Investment 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 Liontown Resources with a short position of Pinnacle Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontown Resources and Pinnacle Investment.

Diversification Opportunities for Liontown Resources and Pinnacle Investment

-0.68

Correlation Coefficient

Liontown Resources  Pinnacle Investment

Excellent diversification

The 3 months correlation between Liontown and Pinnacle is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources and Pinnacle Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Investment and Liontown 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 Liontown Resources are associated (or correlated) with Pinnacle Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Investment has no effect on the direction of Liontown Resources i.e., Liontown Resources and Pinnacle Investment go up and down completely randomly.

Pair Corralation between Liontown Resources and Pinnacle Investment

Assuming the 90 days trading horizon Liontown Resources is expected to under-perform the Pinnacle Investment. In addition to that, Liontown Resources is 1.35 times more volatile than Pinnacle Investment Management. It trades about -0.14 of its total potential returns per unit of risk. Pinnacle Investment Management is currently generating about -0.08 per unit of volatility. If you would invest  2,416  in Pinnacle Investment Management on October 9, 2024 and sell it today you would lose (88.00) from holding Pinnacle Investment Management or give up 3.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Liontown Resources  vs.  Pinnacle Investment Management

Liontown Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liontown Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pinnacle Investment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Investment Management are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Pinnacle Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liontown Resources and Pinnacle Investment

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

The idea behind Liontown Resources and Pinnacle Investment Management 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..