Correlation Between Trilogy Metals and American Battery

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

By analyzing existing cross correlation between Trilogy Metals and American Battery Technology, you can compare the effects of market volatilities on Trilogy Metals and American Battery 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 Trilogy Metals with a short position of American Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trilogy Metals and American Battery.

Diversification Opportunities for Trilogy Metals and American Battery

-0.62

Correlation Coefficient

Trilogy Metals  American Battery

Excellent diversification

The 3 months correlation between Trilogy and American is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Trilogy Metals and American Battery Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Battery Tec and Trilogy Metals 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 Trilogy Metals are associated (or correlated) with American Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Battery Tec has no effect on the direction of Trilogy Metals i.e., Trilogy Metals and American Battery go up and down completely randomly.

Pair Corralation between Trilogy Metals and American Battery

Considering the 90-day investment horizon Trilogy Metals is expected to generate 0.77 times more return on investment than American Battery. However, Trilogy Metals is 1.3 times less risky than American Battery. It trades about 0.14 of its potential returns per unit of risk. American Battery Technology is currently generating about -0.17 per unit of risk. If you would invest  114.00  in Trilogy Metals on December 29, 2024 and sell it today you would earn a total of  54.00  from holding Trilogy Metals or generate 47.37% return on investment over 90 days.

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

Trilogy Metals  vs.  American Battery Technology

Trilogy Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trilogy Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Trilogy Metals reported solid returns over the last few months and may actually be approaching a breakup point.

American Battery Tec

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Battery Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Trilogy Metals and American Battery

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

The idea behind Trilogy Metals and American Battery Technology 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 Stocks Directory module to find actively traded stocks across global markets.