Correlation Between Lsb Industries and Ganfeng Lithium

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

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

Diversification Opportunities for Lsb Industries and Ganfeng Lithium

0.29

Correlation Coefficient

Lsb Industries  Ganfeng Lithium

Modest diversification

The 3 months correlation between Lsb and Ganfeng is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lsb Industries and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium and Lsb Industries 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 Lsb Industries are associated (or correlated) with Ganfeng Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganfeng Lithium has no effect on the direction of Lsb Industries i.e., Lsb Industries and Ganfeng Lithium go up and down completely randomly.

Pair Corralation between Lsb Industries and Ganfeng Lithium

Considering the 90-day investment horizon Lsb Industries is expected to generate 4.74 times less return on investment than Ganfeng Lithium. But when comparing it to its historical volatility, Lsb Industries is 2.22 times less risky than Ganfeng Lithium. It trades about 0.03 of its potential returns per unit of risk. Ganfeng Lithium Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  225.00  in Ganfeng Lithium Co on September 21, 2024 and sell it today you would earn a total of  28.00  from holding Ganfeng Lithium Co or generate 12.44% return on investment over 90 days.

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

Lsb Industries  vs.  Ganfeng Lithium Co

Lsb Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lsb Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Lsb Industries is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ganfeng Lithium

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Lsb Industries and Ganfeng Lithium

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

The idea behind Lsb Industries and Ganfeng Lithium Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.