Correlation Between International Battery and Lithium Ionic

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

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

Diversification Opportunities for International Battery and Lithium Ionic

-0.36

Correlation Coefficient

International Battery  Lithium Ionic

Very good diversification

The 3 months correlation between International and Lithium is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding International Battery Metals and Lithium Ionic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Ionic Corp and International Battery 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 International Battery Metals are associated (or correlated) with Lithium Ionic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Ionic Corp has no effect on the direction of International Battery i.e., International Battery and Lithium Ionic go up and down completely randomly.

Pair Corralation between International Battery and Lithium Ionic

Assuming the 90 days horizon International Battery Metals is expected to under-perform the Lithium Ionic. In addition to that, International Battery is 1.92 times more volatile than Lithium Ionic Corp. It trades about -0.12 of its total potential returns per unit of risk. Lithium Ionic Corp is currently generating about 0.06 per unit of volatility. If you would invest  48.00  in Lithium Ionic Corp on September 14, 2024 and sell it today you would earn a total of  6.00  from holding Lithium Ionic Corp or generate 12.5% return on investment over 90 days.

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

International Battery Metals  vs.  Lithium Ionic Corp

International Battery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Battery Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lithium Ionic Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lithium Ionic Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Lithium Ionic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Battery and Lithium Ionic

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

The idea behind International Battery Metals and Lithium Ionic 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.