Correlation Between POWR Lithium and Spey Resources

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

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

Diversification Opportunities for POWR Lithium and Spey Resources

-0.28

Correlation Coefficient

POWR Lithium  Spey Resources

Very good diversification

The 3 months correlation between POWR and Spey is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding POWR Lithium Corp and Spey Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spey Resources Corp and POWR 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 POWR Lithium Corp are associated (or correlated) with Spey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spey Resources Corp has no effect on the direction of POWR Lithium i.e., POWR Lithium and Spey Resources go up and down completely randomly.

Pair Corralation between POWR Lithium and Spey Resources

Assuming the 90 days horizon POWR Lithium Corp is expected to under-perform the Spey Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, POWR Lithium Corp is 1.57 times less risky than Spey Resources. The otc stock trades about -0.01 of its potential returns per unit of risk. The Spey Resources Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Spey Resources Corp on October 9, 2024 and sell it today you would earn a total of  1.00  from holding Spey Resources Corp or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

POWR Lithium Corp  vs.  Spey Resources Corp

POWR Lithium Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in POWR Lithium Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, POWR Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Spey Resources Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spey Resources Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Spey Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POWR Lithium and Spey Resources

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

The idea behind POWR Lithium Corp and Spey Resources 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.