Correlation Between United Lithium and Silver X

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

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

Diversification Opportunities for United Lithium and Silver X

0.45

Correlation Coefficient

United Lithium  Silver X

Very weak diversification

The 3 months correlation between United and Silver is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding United Lithium Corp and Silver X Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver X Mining and United 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 United Lithium Corp are associated (or correlated) with Silver X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver X Mining has no effect on the direction of United Lithium i.e., United Lithium and Silver X go up and down completely randomly.

Pair Corralation between United Lithium and Silver X

Assuming the 90 days horizon United Lithium Corp is expected to under-perform the Silver X. In addition to that, United Lithium is 2.6 times more volatile than Silver X Mining. It trades about -0.04 of its total potential returns per unit of risk. Silver X Mining is currently generating about 0.02 per unit of volatility. If you would invest  15.00  in Silver X Mining on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Silver X Mining or generate 0.0% return on investment over 90 days.

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

United Lithium Corp  vs.  Silver X Mining

United Lithium Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile technical indicators, United Lithium may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Silver X Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with United Lithium and Silver X

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

The idea behind United Lithium Corp and Silver X Mining 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..