Correlation Between Piedmont Lithium and HPX Corp

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

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

Diversification Opportunities for Piedmont Lithium and HPX Corp

-0.34

Correlation Coefficient

Piedmont Lithium  HPX Corp

Very good diversification

The 3 months correlation between Piedmont and HPX is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Piedmont Lithium Ltd and HPX Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HPX Corp and Piedmont 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 Piedmont Lithium Ltd are associated (or correlated) with HPX Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HPX Corp has no effect on the direction of Piedmont Lithium i.e., Piedmont Lithium and HPX Corp go up and down completely randomly.

Pair Corralation between Piedmont Lithium and HPX Corp

Considering the 90-day investment horizon Piedmont Lithium Ltd is expected to under-perform the HPX Corp. But the stock apears to be less risky and, when comparing its historical volatility, Piedmont Lithium Ltd is 5.57 times less risky than HPX Corp. The stock trades about -0.05 of its potential returns per unit of risk. The HPX Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  990.00  in HPX Corp on September 26, 2024 and sell it today you would earn a total of  735.00  from holding HPX Corp or generate 74.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	8.48%
Values	Daily Returns

Piedmont Lithium Ltd  vs.  HPX Corp

Piedmont Lithium

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Piedmont Lithium Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Piedmont Lithium may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HPX Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HPX Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, HPX Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Piedmont Lithium and HPX Corp

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

The idea behind Piedmont Lithium Ltd and HPX 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.