Correlation Between United Lithium and American Lithium
Can any of the company-specific risk be diversified away by investing in both United Lithium and American Lithium 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 American Lithium 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 American Lithium Corp, you can compare the effects of market volatilities on United Lithium and American Lithium 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 American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Lithium and American Lithium.
Diversification Opportunities for United Lithium and American Lithium
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United Lithium Corp and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp 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 American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of United Lithium i.e., United Lithium and American Lithium go up and down completely randomly.
Pair Corralation between United Lithium and American Lithium
If you would invest 13.00 in United Lithium Corp on December 1, 2024 and sell it today you would lose (3.00) from holding United Lithium Corp or give up 23.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
United Lithium Corp vs. American Lithium Corp
Performance |
Timeline |
United Lithium Corp |
American Lithium Corp |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
United Lithium and American Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Lithium and American Lithium
The main advantage of trading using opposite United Lithium and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Lithium position performs unexpectedly, American Lithium 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 Lithium will offset losses from the drop in American Lithium's long position.United Lithium vs. Alpha Copper Corp | United Lithium vs. REDFLEX HOLDINGS LTD | United Lithium vs. Global Helium Corp | United Lithium vs. Ridgestone Mining |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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