Correlation Between American Lithium and Nevada Sunrise

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

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

Diversification Opportunities for American Lithium and Nevada Sunrise

0.06

Correlation Coefficient

American Lithium  Nevada Sunrise

Significant diversification

The 3 months correlation between American and Nevada is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Nevada Sunrise Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nevada Sunrise Gold and American 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 American Lithium Corp are associated (or correlated) with Nevada Sunrise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nevada Sunrise Gold has no effect on the direction of American Lithium i.e., American Lithium and Nevada Sunrise go up and down completely randomly.

Pair Corralation between American Lithium and Nevada Sunrise

Given the investment horizon of 90 days American Lithium is expected to generate 1.07 times less return on investment than Nevada Sunrise. In addition to that, American Lithium is 1.14 times more volatile than Nevada Sunrise Gold. It trades about 0.03 of its total potential returns per unit of risk. Nevada Sunrise Gold is currently generating about 0.03 per unit of volatility. If you would invest  2.00  in Nevada Sunrise Gold on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Nevada Sunrise Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

American Lithium Corp  vs.  Nevada Sunrise Gold

American Lithium Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Lithium Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, American Lithium showed solid returns over the last few months and may actually be approaching a breakup point.

Nevada Sunrise Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nevada Sunrise Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nevada Sunrise showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Lithium and Nevada Sunrise

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

The idea behind American Lithium Corp and Nevada Sunrise Gold 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.