Correlation Between Lake Resources and Tartisan Nickel

Can any of the company-specific risk be diversified away by investing in both Lake Resources and Tartisan Nickel 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 Tartisan Nickel 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 Tartisan Nickel Corp, you can compare the effects of market volatilities on Lake Resources and Tartisan Nickel 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 Tartisan Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Tartisan Nickel.

Diversification Opportunities for Lake Resources and Tartisan Nickel

-0.23

Correlation Coefficient

Lake Resources  Tartisan Nickel

Very good diversification

The 3 months correlation between Lake and Tartisan is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Tartisan Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tartisan Nickel Corp 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 Tartisan Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tartisan Nickel Corp has no effect on the direction of Lake Resources i.e., Lake Resources and Tartisan Nickel go up and down completely randomly.

Pair Corralation between Lake Resources and Tartisan Nickel

Assuming the 90 days horizon Lake Resources NL is expected to generate 2.72 times more return on investment than Tartisan Nickel. However, Lake Resources is 2.72 times more volatile than Tartisan Nickel Corp. It trades about 0.04 of its potential returns per unit of risk. Tartisan Nickel Corp is currently generating about 0.1 per unit of risk. If you would invest  2.61  in Lake Resources NL on September 15, 2024 and sell it today you would lose (0.08) from holding Lake Resources NL or give up 3.07% of portfolio value over 90 days.

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

Lake Resources NL  vs.  Tartisan Nickel Corp

Lake Resources NL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lake Resources NL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Lake Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Tartisan Nickel Corp

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tartisan Nickel Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tartisan Nickel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lake Resources and Tartisan Nickel

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

The idea behind Lake Resources NL and Tartisan Nickel 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.