Correlation Between Stria Lithium and Geodrill

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

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

Diversification Opportunities for Stria Lithium and Geodrill

-0.16

Correlation Coefficient

Stria Lithium  Geodrill

Good diversification

The 3 months correlation between Stria and Geodrill is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Stria Lithium and Geodrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geodrill Limited and Stria 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 Stria Lithium are associated (or correlated) with Geodrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geodrill Limited has no effect on the direction of Stria Lithium i.e., Stria Lithium and Geodrill go up and down completely randomly.

Pair Corralation between Stria Lithium and Geodrill

Assuming the 90 days horizon Stria Lithium is expected to under-perform the Geodrill. In addition to that, Stria Lithium is 3.55 times more volatile than Geodrill Limited. It trades about -0.04 of its total potential returns per unit of risk. Geodrill Limited is currently generating about 0.08 per unit of volatility. If you would invest  261.00  in Geodrill Limited on September 2, 2024 and sell it today you would earn a total of  25.00  from holding Geodrill Limited or generate 9.58% return on investment over 90 days.

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

Stria Lithium  vs.  Geodrill Limited

Stria Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stria Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Geodrill Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Geodrill Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Geodrill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Stria Lithium and Geodrill

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

The idea behind Stria Lithium and Geodrill 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.