Correlation Between POWR Lithium and Sayona Mining

Can any of the company-specific risk be diversified away by investing in both POWR Lithium and Sayona Mining 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 Sayona Mining 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 Sayona Mining Limited, you can compare the effects of market volatilities on POWR Lithium and Sayona Mining 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 Sayona Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWR Lithium and Sayona Mining.

Diversification Opportunities for POWR Lithium and Sayona Mining

0.15

Correlation Coefficient

POWR Lithium  Sayona Mining

Average diversification

The 3 months correlation between POWR and Sayona is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding POWR Lithium Corp and Sayona Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sayona Mining Limited 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 Sayona Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sayona Mining Limited has no effect on the direction of POWR Lithium i.e., POWR Lithium and Sayona Mining go up and down completely randomly.

Pair Corralation between POWR Lithium and Sayona Mining

Assuming the 90 days horizon POWR Lithium Corp is expected to generate 8.01 times more return on investment than Sayona Mining. However, POWR Lithium is 8.01 times more volatile than Sayona Mining Limited. It trades about 0.13 of its potential returns per unit of risk. Sayona Mining Limited is currently generating about 0.08 per unit of risk. If you would invest  4.74  in POWR Lithium Corp on September 4, 2024 and sell it today you would earn a total of  1.16  from holding POWR Lithium Corp or generate 24.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

POWR Lithium Corp  vs.  Sayona Mining Limited

POWR Lithium Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POWR Lithium Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, POWR Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Sayona Mining Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sayona Mining Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sayona Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POWR Lithium and Sayona Mining

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

The idea behind POWR Lithium Corp and Sayona Mining 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.