Correlation Between Placer Creek and Liontown Resources

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

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

Diversification Opportunities for Placer Creek and Liontown Resources

0.0

Correlation Coefficient

Placer Creek  Liontown Resources

Pay attention - limited upside

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

Pair Corralation between Placer Creek and Liontown Resources

If you would invest  0.01  in Placer Creek Mining on November 20, 2024 and sell it today you would earn a total of  0.00  from holding Placer Creek Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Placer Creek Mining  vs.  Liontown Resources Limited

Placer Creek Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Placer Creek Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Placer Creek is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Liontown Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liontown Resources 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 basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Placer Creek and Liontown Resources

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

The idea behind Placer Creek Mining and Liontown 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.