Correlation Between South Star and Lithium Ionic
Can any of the company-specific risk be diversified away by investing in both South Star and Lithium Ionic 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 South Star and Lithium Ionic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Star Battery and Lithium Ionic Corp, you can compare the effects of market volatilities on South Star and Lithium Ionic 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 South Star with a short position of Lithium Ionic. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Star and Lithium Ionic.
Diversification Opportunities for South Star and Lithium Ionic
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between South and Lithium is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding South Star Battery and Lithium Ionic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Ionic Corp and South Star 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 South Star Battery are associated (or correlated) with Lithium Ionic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Ionic Corp has no effect on the direction of South Star i.e., South Star and Lithium Ionic go up and down completely randomly.
Pair Corralation between South Star and Lithium Ionic
Assuming the 90 days horizon South Star Battery is expected to under-perform the Lithium Ionic. In addition to that, South Star is 1.65 times more volatile than Lithium Ionic Corp. It trades about -0.03 of its total potential returns per unit of risk. Lithium Ionic Corp is currently generating about 0.11 per unit of volatility. If you would invest 54.00 in Lithium Ionic Corp on December 29, 2024 and sell it today you would earn a total of 17.00 from holding Lithium Ionic Corp or generate 31.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.39% |
Values | Daily Returns |
South Star Battery vs. Lithium Ionic Corp
Performance |
Timeline |
South Star Battery |
Lithium Ionic Corp |
South Star and Lithium Ionic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with South Star and Lithium Ionic
The main advantage of trading using opposite South Star and Lithium Ionic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Star position performs unexpectedly, Lithium Ionic 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 Lithium Ionic will offset losses from the drop in Lithium Ionic's long position.South Star vs. ZincX Resources Corp | South Star vs. Nuinsco Resources Limited | South Star vs. Zinc One Resources | South Star vs. Qubec Nickel Corp |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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