Correlation Between Ras Technology and Core Lithium

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

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

Diversification Opportunities for Ras Technology and Core Lithium

0.66

Correlation Coefficient

Ras Technology  Core Lithium

Poor diversification

The 3 months correlation between Ras and Core is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ras Technology Holdings and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium and Ras Technology 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 Ras Technology Holdings are associated (or correlated) with Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Ras Technology i.e., Ras Technology and Core Lithium go up and down completely randomly.

Pair Corralation between Ras Technology and Core Lithium

Assuming the 90 days trading horizon Ras Technology Holdings is expected to generate 0.73 times more return on investment than Core Lithium. However, Ras Technology Holdings is 1.37 times less risky than Core Lithium. It trades about 0.05 of its potential returns per unit of risk. Core Lithium is currently generating about -0.07 per unit of risk. If you would invest  50.00  in Ras Technology Holdings on September 18, 2024 and sell it today you would earn a total of  40.00  from holding Ras Technology Holdings or generate 80.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ras Technology Holdings  vs.  Core Lithium

Ras Technology Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ras Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Core Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ras Technology and Core Lithium

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

The idea behind Ras Technology Holdings and Core Lithium 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.