Correlation Between Standard Lithium and Global Helium

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

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

Diversification Opportunities for Standard Lithium and Global Helium

0.2

Correlation Coefficient

Standard Lithium  Global Helium

Modest diversification

The 3 months correlation between Standard and Global is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Standard Lithium and Global Helium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Helium 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 Global Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Helium Corp has no effect on the direction of Standard Lithium i.e., Standard Lithium and Global Helium go up and down completely randomly.

Pair Corralation between Standard Lithium and Global Helium

Considering the 90-day investment horizon Standard Lithium is expected to under-perform the Global Helium. But the stock apears to be less risky and, when comparing its historical volatility, Standard Lithium is 4.21 times less risky than Global Helium. The stock trades about -0.13 of its potential returns per unit of risk. The Global Helium Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3.61  in Global Helium Corp on December 2, 2024 and sell it today you would lose (1.50) from holding Global Helium Corp or give up 41.55% of portfolio value over 90 days.

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

Standard Lithium  vs.  Global Helium Corp

Standard Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Standard Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Global Helium Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Standard Lithium and Global Helium

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

The idea behind Standard Lithium and Global Helium 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .