Correlation Between Lithium Ionic and St Georges

Can any of the company-specific risk be diversified away by investing in both Lithium Ionic and St Georges 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 St Georges 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 St Georges Eco Mining Corp, you can compare the effects of market volatilities on Lithium Ionic and St Georges 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 St Georges. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Ionic and St Georges.

Diversification Opportunities for Lithium Ionic and St Georges

-0.37

Correlation Coefficient

Lithium Ionic  St Georges

Very good diversification

The 3 months correlation between Lithium and SXOOF is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Ionic Corp and St Georges Eco Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Georges Eco 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 St Georges. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Georges Eco has no effect on the direction of Lithium Ionic i.e., Lithium Ionic and St Georges go up and down completely randomly.

Pair Corralation between Lithium Ionic and St Georges

Assuming the 90 days horizon Lithium Ionic Corp is expected to generate 0.66 times more return on investment than St Georges. However, Lithium Ionic Corp is 1.52 times less risky than St Georges. It trades about 0.06 of its potential returns per unit of risk. St Georges Eco Mining Corp is currently generating about 0.02 per unit of risk. If you would invest  48.00  in Lithium Ionic Corp on September 17, 2024 and sell it today you would earn a total of  6.00  from holding Lithium Ionic Corp or generate 12.5% return on investment over 90 days.

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

Lithium Ionic Corp  vs.  St Georges Eco Mining Corp

Lithium Ionic Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lithium Ionic Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Lithium Ionic reported solid returns over the last few months and may actually be approaching a breakup point.

St Georges Eco

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in St Georges Eco Mining Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, St Georges may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lithium Ionic and St Georges

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

The idea behind Lithium Ionic Corp and St Georges Eco Mining 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..