Correlation Between Jutal Offshore and LithiumBank Resources

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

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

Diversification Opportunities for Jutal Offshore and LithiumBank Resources

0.63

Correlation Coefficient

Jutal Offshore  LithiumBank Resources

Poor diversification

The 3 months correlation between Jutal and LithiumBank is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Jutal Offshore Oil and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank Resources and Jutal Offshore 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 Jutal Offshore Oil are associated (or correlated) with LithiumBank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LithiumBank Resources has no effect on the direction of Jutal Offshore i.e., Jutal Offshore and LithiumBank Resources go up and down completely randomly.

Pair Corralation between Jutal Offshore and LithiumBank Resources

Assuming the 90 days horizon Jutal Offshore Oil is expected to under-perform the LithiumBank Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Jutal Offshore Oil is 71.73 times less risky than LithiumBank Resources. The pink sheet trades about -0.22 of its potential returns per unit of risk. The LithiumBank Resources Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  20.00  in LithiumBank Resources Corp on September 24, 2024 and sell it today you would earn a total of  0.00  from holding LithiumBank Resources Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Jutal Offshore Oil  vs.  LithiumBank Resources Corp

Jutal Offshore Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jutal Offshore Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Jutal Offshore is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

LithiumBank Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LithiumBank Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward-looking signals 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.

Pair Trading with Jutal Offshore and LithiumBank Resources

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

The idea behind Jutal Offshore Oil and LithiumBank Resources 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.