Correlation Between Pilbara Minerals and Lithium Power

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

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

Diversification Opportunities for Pilbara Minerals and Lithium Power

0.0

Correlation Coefficient

Pilbara Minerals  Lithium Power

Pay attention - limited upside

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

Pair Corralation between Pilbara Minerals and Lithium Power

If you would invest (100.00) in Lithium Power International on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Lithium Power International or generate -100.0% return on investment over 90 days.

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

Pilbara Minerals Limited  vs.  Lithium Power International

Pilbara Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pilbara Minerals Limited 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 fundamental drivers 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.

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.

Pair Trading with Pilbara Minerals and Lithium Power

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

The idea behind Pilbara Minerals Limited and Lithium Power International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.