Correlation Between Global Li and Strategic Resources

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

By analyzing existing cross correlation between Global Li Ion Graphite and Strategic Resources, you can compare the effects of market volatilities on Global Li and Strategic Resources 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 Global Li with a short position of Strategic Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Li and Strategic Resources.

Diversification Opportunities for Global Li and Strategic Resources

0.0

Correlation Coefficient

Global Li  Strategic Resources

Pay attention - limited upside

The 3 months correlation between Global and Strategic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Global Li Ion Graphite and Strategic Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Resources and Global Li 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 Global Li Ion Graphite are associated (or correlated) with Strategic Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Resources has no effect on the direction of Global Li i.e., Global Li and Strategic Resources go up and down completely randomly.

Pair Corralation between Global Li and Strategic Resources

If you would invest  1.98  in Global Li Ion Graphite on September 14, 2024 and sell it today you would lose (0.72) from holding Global Li Ion Graphite or give up 36.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Global Li Ion Graphite  vs.  Strategic Resources

Global Li Ion

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Li Ion Graphite are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Global Li reported solid returns over the last few months and may actually be approaching a breakup point.

Strategic Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Global Li and Strategic Resources

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

The idea behind Global Li Ion Graphite and Strategic Resources 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.