Correlation Between Orbit Garant and American Lithium

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

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

Diversification Opportunities for Orbit Garant and American Lithium

0.24

Correlation Coefficient

Orbit Garant  American Lithium

Modest diversification

The 3 months correlation between Orbit and American is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Orbit Garant Drilling and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp and Orbit Garant 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 Orbit Garant Drilling are associated (or correlated) with American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Orbit Garant i.e., Orbit Garant and American Lithium go up and down completely randomly.

Pair Corralation between Orbit Garant and American Lithium

Assuming the 90 days trading horizon Orbit Garant Drilling is expected to generate 0.51 times more return on investment than American Lithium. However, Orbit Garant Drilling is 1.97 times less risky than American Lithium. It trades about -0.08 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.34 per unit of risk. If you would invest  85.00  in Orbit Garant Drilling on September 23, 2024 and sell it today you would lose (6.00) from holding Orbit Garant Drilling or give up 7.06% of portfolio value over 90 days.

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

Orbit Garant Drilling  vs.  American Lithium Corp

Orbit Garant Drilling

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orbit Garant Drilling are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Orbit Garant displayed solid returns over the last few months and may actually be approaching a breakup point.

American Lithium Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Lithium Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, American Lithium showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orbit Garant and American Lithium

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

The idea behind Orbit Garant Drilling and American Lithium 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.

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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .