Correlation Between Group Ten and Stria Lithium

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

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

Diversification Opportunities for Group Ten and Stria Lithium

-0.01

Correlation Coefficient

Group Ten  Stria Lithium

Good diversification

The 3 months correlation between Group and Stria is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Group Ten Metals and Stria Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stria Lithium and Group Ten 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 Group Ten Metals are associated (or correlated) with Stria Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stria Lithium has no effect on the direction of Group Ten i.e., Group Ten and Stria Lithium go up and down completely randomly.

Pair Corralation between Group Ten and Stria Lithium

Assuming the 90 days horizon Group Ten Metals is expected to under-perform the Stria Lithium. But the otc stock apears to be less risky and, when comparing its historical volatility, Group Ten Metals is 9.62 times less risky than Stria Lithium. The otc stock trades about -0.32 of its potential returns per unit of risk. The Stria Lithium is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2.10  in Stria Lithium on December 1, 2024 and sell it today you would earn a total of  3.37  from holding Stria Lithium or generate 160.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Group Ten Metals  vs.  Stria Lithium

Group Ten Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Group Ten Metals 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.

Stria Lithium

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stria Lithium are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Stria Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Group Ten and Stria Lithium

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

The idea behind Group Ten Metals and Stria Lithium 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.