Correlation Between Noram Lithium and Myriad Uranium

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

By analyzing existing cross correlation between Noram Lithium Corp and Myriad Uranium Corp, you can compare the effects of market volatilities on Noram Lithium and Myriad Uranium 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 Noram Lithium with a short position of Myriad Uranium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noram Lithium and Myriad Uranium.

Diversification Opportunities for Noram Lithium and Myriad Uranium

0.64

Correlation Coefficient

Noram Lithium  Myriad Uranium

Poor diversification

The 3 months correlation between Noram and Myriad is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Noram Lithium Corp and Myriad Uranium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myriad Uranium Corp and Noram Lithium 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 Noram Lithium Corp are associated (or correlated) with Myriad Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myriad Uranium Corp has no effect on the direction of Noram Lithium i.e., Noram Lithium and Myriad Uranium go up and down completely randomly.

Pair Corralation between Noram Lithium and Myriad Uranium

Assuming the 90 days horizon Noram Lithium Corp is expected to generate 0.93 times more return on investment than Myriad Uranium. However, Noram Lithium Corp is 1.07 times less risky than Myriad Uranium. It trades about -0.1 of its potential returns per unit of risk. Myriad Uranium Corp is currently generating about -0.14 per unit of risk. If you would invest  9.00  in Noram Lithium Corp on December 1, 2024 and sell it today you would lose (2.60) from holding Noram Lithium Corp or give up 28.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Noram Lithium Corp  vs.  Myriad Uranium Corp

Noram Lithium Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Noram Lithium Corp 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 basic 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.

Myriad Uranium Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Myriad Uranium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic 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.

Pair Trading with Noram Lithium and Myriad Uranium

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

The idea behind Noram Lithium Corp and Myriad Uranium Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.