Correlation Between Standard Lithium and Energold Drilling

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

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

Diversification Opportunities for Standard Lithium and Energold Drilling

0.0

Correlation Coefficient

Standard Lithium  Energold Drilling

Pay attention - limited upside

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

Pair Corralation between Standard Lithium and Energold Drilling

Considering the 90-day investment horizon Standard Lithium is expected to generate 1.05 times more return on investment than Energold Drilling. However, Standard Lithium is 1.05 times more volatile than Energold Drilling Corp. It trades about -0.02 of its potential returns per unit of risk. Energold Drilling Corp is currently generating about -0.05 per unit of risk. If you would invest  463.00  in Standard Lithium on October 8, 2024 and sell it today you would lose (293.00) from holding Standard Lithium or give up 63.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Standard Lithium  vs.  Energold Drilling Corp

Standard Lithium

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Lithium are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady essential indicators, Standard Lithium may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Energold Drilling Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energold Drilling Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Energold Drilling is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Standard Lithium and Energold Drilling

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

The idea behind Standard Lithium and Energold Drilling 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.