Correlation Between Zacapa Resources and International Lithium

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

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

Diversification Opportunities for Zacapa Resources and International Lithium

0.49

Correlation Coefficient

Zacapa Resources  International Lithium

Very weak diversification

The 3 months correlation between Zacapa and International is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Zacapa Resources and International Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Lithium and Zacapa Resources 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 Zacapa Resources are associated (or correlated) with International Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Lithium has no effect on the direction of Zacapa Resources i.e., Zacapa Resources and International Lithium go up and down completely randomly.

Pair Corralation between Zacapa Resources and International Lithium

Assuming the 90 days horizon Zacapa Resources is expected to under-perform the International Lithium. In addition to that, Zacapa Resources is 1.09 times more volatile than International Lithium Corp. It trades about -0.03 of its total potential returns per unit of risk. International Lithium Corp is currently generating about 0.0 per unit of volatility. If you would invest  5.70  in International Lithium Corp on October 27, 2024 and sell it today you would lose (4.59) from holding International Lithium Corp or give up 80.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	23.68%
Values	Daily Returns

Zacapa Resources  vs.  International Lithium Corp

Zacapa Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

International Lithium

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Lithium Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, International Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zacapa Resources and International Lithium

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

The idea behind Zacapa Resources and International Lithium Corp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.