Correlation Between Lake Resources and Blackstone Minerals

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

By analyzing existing cross correlation between Lake Resources NL and Blackstone Minerals, you can compare the effects of market volatilities on Lake Resources and Blackstone Minerals 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 Lake Resources with a short position of Blackstone Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Blackstone Minerals.

Diversification Opportunities for Lake Resources and Blackstone Minerals

0.3

Correlation Coefficient

Lake Resources  Blackstone Minerals

Weak diversification

The 3 months correlation between Lake and Blackstone is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Blackstone Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Minerals and Lake Resources 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 Lake Resources NL are associated (or correlated) with Blackstone Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Minerals has no effect on the direction of Lake Resources i.e., Lake Resources and Blackstone Minerals go up and down completely randomly.

Pair Corralation between Lake Resources and Blackstone Minerals

Assuming the 90 days horizon Lake Resources NL is expected to under-perform the Blackstone Minerals. But the otc stock apears to be less risky and, when comparing its historical volatility, Lake Resources NL is 9.65 times less risky than Blackstone Minerals. The otc stock trades about -0.16 of its potential returns per unit of risk. The Blackstone Minerals is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2.01  in Blackstone Minerals on September 22, 2024 and sell it today you would lose (0.51) from holding Blackstone Minerals or give up 25.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.73%
Values	Daily Returns

Lake Resources NL  vs.  Blackstone Minerals

Lake Resources NL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lake Resources NL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward-looking signals, Lake Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Blackstone Minerals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Minerals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Blackstone Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lake Resources and Blackstone Minerals

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

The idea behind Lake Resources NL and Blackstone Minerals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.