Correlation Between International Lithium and GéoMégA Resources

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

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

Diversification Opportunities for International Lithium and GéoMégA Resources

-0.03

Correlation Coefficient

International Lithium  GéoMégA Resources

Good diversification

The 3 months correlation between International and GéoMégA is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding International Lithium Corp and GoMgA Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GéoMégA Resources and International 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 International Lithium Corp are associated (or correlated) with GéoMégA Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GéoMégA Resources has no effect on the direction of International Lithium i.e., International Lithium and GéoMégA Resources go up and down completely randomly.

Pair Corralation between International Lithium and GéoMégA Resources

Assuming the 90 days horizon International Lithium is expected to generate 1.88 times less return on investment than GéoMégA Resources. But when comparing it to its historical volatility, International Lithium Corp is 1.14 times less risky than GéoMégA Resources. It trades about 0.05 of its potential returns per unit of risk. GoMgA Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6.00  in GoMgA Resources on September 5, 2024 and sell it today you would earn a total of  1.00  from holding GoMgA Resources or generate 16.67% return on investment over 90 days.

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

International Lithium Corp  vs.  GoMgA Resources

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.

GéoMégA Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GoMgA Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GéoMégA Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Lithium and GéoMégA Resources

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

The idea behind International Lithium Corp and GoMgA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.