Correlation Between Patriot Battery and Latin Resources

Can any of the company-specific risk be diversified away by investing in both Patriot Battery and Latin Resources 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 Patriot Battery and Latin Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Patriot Battery Metals and Latin Resources Limited, you can compare the effects of market volatilities on Patriot Battery and Latin Resources 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 Patriot Battery with a short position of Latin Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patriot Battery and Latin Resources.

Diversification Opportunities for Patriot Battery and Latin Resources

-0.08

Correlation Coefficient

Patriot Battery  Latin Resources

Good diversification

The 3 months correlation between Patriot and Latin is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Patriot Battery Metals and Latin Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latin Resources and Patriot Battery 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 Patriot Battery Metals are associated (or correlated) with Latin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latin Resources has no effect on the direction of Patriot Battery i.e., Patriot Battery and Latin Resources go up and down completely randomly.

Pair Corralation between Patriot Battery and Latin Resources

Assuming the 90 days horizon Patriot Battery Metals is expected to under-perform the Latin Resources. In addition to that, Patriot Battery is 98.21 times more volatile than Latin Resources Limited. It trades about -0.08 of its total potential returns per unit of risk. Latin Resources Limited is currently generating about -0.18 per unit of volatility. If you would invest  9.02  in Latin Resources Limited on December 29, 2024 and sell it today you would lose (0.02) from holding Latin Resources Limited or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.54%
Values	Daily Returns

Patriot Battery Metals  vs.  Latin Resources Limited

Patriot Battery Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Patriot Battery 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.

Latin Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Latin Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Latin Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Patriot Battery and Latin Resources

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

The idea behind Patriot Battery Metals and Latin Resources Limited 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.