Correlation Between Lithium Ionic and CanAlaska Uranium

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

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

Diversification Opportunities for Lithium Ionic and CanAlaska Uranium

0.03

Correlation Coefficient

Lithium Ionic  CanAlaska Uranium

Significant diversification

The 3 months correlation between Lithium and CanAlaska is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Ionic Corp and CanAlaska Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanAlaska Uranium and Lithium Ionic 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 Lithium Ionic Corp are associated (or correlated) with CanAlaska Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanAlaska Uranium has no effect on the direction of Lithium Ionic i.e., Lithium Ionic and CanAlaska Uranium go up and down completely randomly.

Pair Corralation between Lithium Ionic and CanAlaska Uranium

Assuming the 90 days horizon Lithium Ionic Corp is expected to generate 1.62 times more return on investment than CanAlaska Uranium. However, Lithium Ionic is 1.62 times more volatile than CanAlaska Uranium. It trades about 0.03 of its potential returns per unit of risk. CanAlaska Uranium is currently generating about -0.04 per unit of risk. If you would invest  52.00  in Lithium Ionic Corp on September 26, 2024 and sell it today you would earn a total of  1.00  from holding Lithium Ionic Corp or generate 1.92% return on investment over 90 days.

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

Lithium Ionic Corp  vs.  CanAlaska Uranium

Lithium Ionic Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lithium Ionic Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Lithium Ionic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CanAlaska Uranium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CanAlaska Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lithium Ionic and CanAlaska Uranium

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

The idea behind Lithium Ionic Corp and CanAlaska Uranium 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.