Correlation Between Stria Lithium and Dynacor Gold

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

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

Diversification Opportunities for Stria Lithium and Dynacor Gold

-0.49

Correlation Coefficient

Stria Lithium  Dynacor Gold

Very good diversification

The 3 months correlation between Stria and Dynacor is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stria Lithium and Dynacor Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynacor Gold Mines and Stria Lithium 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 Stria Lithium are associated (or correlated) with Dynacor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynacor Gold Mines has no effect on the direction of Stria Lithium i.e., Stria Lithium and Dynacor Gold go up and down completely randomly.

Pair Corralation between Stria Lithium and Dynacor Gold

Assuming the 90 days horizon Stria Lithium is expected to generate 5.95 times more return on investment than Dynacor Gold. However, Stria Lithium is 5.95 times more volatile than Dynacor Gold Mines. It trades about 0.05 of its potential returns per unit of risk. Dynacor Gold Mines is currently generating about -0.04 per unit of risk. If you would invest  6.50  in Stria Lithium on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Stria Lithium or generate 0.0% return on investment over 90 days.

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

Stria Lithium  vs.  Dynacor Gold Mines

Stria Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stria Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Stria Lithium is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Dynacor Gold Mines

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dynacor Gold Mines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Dynacor Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Stria Lithium and Dynacor Gold

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

The idea behind Stria Lithium and Dynacor Gold Mines 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.