Correlation Between Stallion Discoveries and Lake Resources
Can any of the company-specific risk be diversified away by investing in both Stallion Discoveries and Lake Resources 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 Stallion Discoveries and Lake Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stallion Discoveries Corp and Lake Resources NL, you can compare the effects of market volatilities on Stallion Discoveries and Lake Resources 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 Stallion Discoveries with a short position of Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stallion Discoveries and Lake Resources.
Diversification Opportunities for Stallion Discoveries and Lake Resources
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Stallion and Lake is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Stallion Discoveries Corp and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL and Stallion Discoveries 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 Stallion Discoveries Corp are associated (or correlated) with Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Stallion Discoveries i.e., Stallion Discoveries and Lake Resources go up and down completely randomly.
Pair Corralation between Stallion Discoveries and Lake Resources
Assuming the 90 days horizon Stallion Discoveries Corp is expected to generate 1.74 times more return on investment than Lake Resources. However, Stallion Discoveries is 1.74 times more volatile than Lake Resources NL. It trades about 0.01 of its potential returns per unit of risk. Lake Resources NL is currently generating about -0.03 per unit of risk. If you would invest 2.70 in Stallion Discoveries Corp on November 22, 2024 and sell it today you would lose (0.63) from holding Stallion Discoveries Corp or give up 23.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.33% |
Values | Daily Returns |
Stallion Discoveries Corp vs. Lake Resources NL
Performance |
Timeline |
Stallion Discoveries Corp |
Lake Resources NL |
Stallion Discoveries and Lake Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stallion Discoveries and Lake Resources
The main advantage of trading using opposite Stallion Discoveries and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stallion Discoveries position performs unexpectedly, Lake Resources 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 Lake Resources will offset losses from the drop in Lake Resources' long position.Stallion Discoveries vs. Aspen Technology | ||
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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