Correlation Between BAIYU Holdings and Standard Lithium

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

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

Diversification Opportunities for BAIYU Holdings and Standard Lithium

-0.65

Correlation Coefficient

BAIYU Holdings  Standard Lithium

Excellent diversification

The 3 months correlation between BAIYU and Standard is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BAIYU Holdings and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium and BAIYU Holdings 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 BAIYU Holdings are associated (or correlated) with Standard Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Lithium has no effect on the direction of BAIYU Holdings i.e., BAIYU Holdings and Standard Lithium go up and down completely randomly.

Pair Corralation between BAIYU Holdings and Standard Lithium

Considering the 90-day investment horizon BAIYU Holdings is expected to under-perform the Standard Lithium. In addition to that, BAIYU Holdings is 1.99 times more volatile than Standard Lithium. It trades about -0.31 of its total potential returns per unit of risk. Standard Lithium is currently generating about 0.12 per unit of volatility. If you would invest  121.00  in Standard Lithium on September 2, 2024 and sell it today you would earn a total of  58.00  from holding Standard Lithium or generate 47.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.63%
Values	Daily Returns

BAIYU Holdings  vs.  Standard Lithium

BAIYU Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Standard Lithium

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Lithium are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting essential indicators, Standard Lithium demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BAIYU Holdings and Standard Lithium

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

The idea behind BAIYU Holdings and Standard Lithium 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.