Correlation Between US Lithium and Nutranomics

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

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

Diversification Opportunities for US Lithium and Nutranomics

-0.06

Correlation Coefficient

US Lithium  Nutranomics

Good diversification

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

Pair Corralation between US Lithium and Nutranomics

Given the investment horizon of 90 days US Lithium Corp is expected to under-perform the Nutranomics. But the stock apears to be less risky and, when comparing its historical volatility, US Lithium Corp is 18.78 times less risky than Nutranomics. The stock trades about -0.13 of its potential returns per unit of risk. The Nutranomics is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Nutranomics on September 20, 2024 and sell it today you would earn a total of  0.01  from holding Nutranomics or generate 9.223372036854776E16% return on investment over 90 days.

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

US Lithium Corp  vs.  Nutranomics

US Lithium Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Nutranomics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nutranomics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nutranomics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Lithium and Nutranomics

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

The idea behind US Lithium Corp and Nutranomics 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.