Correlation Between Mydecine Innovations and US Lithium

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

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

Diversification Opportunities for Mydecine Innovations and US Lithium

-0.02

Correlation Coefficient

Mydecine Innovations  US Lithium

Good diversification

The 3 months correlation between Mydecine and LITH is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mydecine Innovations Group and US Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Lithium Corp and Mydecine Innovations 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 Mydecine Innovations Group are associated (or correlated) with US Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Lithium Corp has no effect on the direction of Mydecine Innovations i.e., Mydecine Innovations and US Lithium go up and down completely randomly.

Pair Corralation between Mydecine Innovations and US Lithium

Assuming the 90 days horizon Mydecine Innovations Group is expected to generate 2.06 times more return on investment than US Lithium. However, Mydecine Innovations is 2.06 times more volatile than US Lithium Corp. It trades about 0.19 of its potential returns per unit of risk. US Lithium Corp is currently generating about -0.21 per unit of risk. If you would invest  0.40  in Mydecine Innovations Group on September 19, 2024 and sell it today you would earn a total of  0.20  from holding Mydecine Innovations Group or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Mydecine Innovations Group  vs.  US Lithium Corp

Mydecine Innovations

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mydecine Innovations Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Mydecine Innovations reported solid returns over the last few months and may actually be approaching a breakup point.

US Lithium Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Mydecine Innovations and US Lithium

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

The idea behind Mydecine Innovations Group and US Lithium 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.