Correlation Between Zinc One and Ameriwest Lithium

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

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

Diversification Opportunities for Zinc One and Ameriwest Lithium

0.31

Correlation Coefficient

Zinc One  Ameriwest Lithium

Weak diversification

The 3 months correlation between Zinc and Ameriwest is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Zinc One Resources and Ameriwest Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriwest Lithium and Zinc One 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 Zinc One Resources are associated (or correlated) with Ameriwest Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriwest Lithium has no effect on the direction of Zinc One i.e., Zinc One and Ameriwest Lithium go up and down completely randomly.

Pair Corralation between Zinc One and Ameriwest Lithium

Assuming the 90 days horizon Zinc One is expected to generate 9.37 times less return on investment than Ameriwest Lithium. But when comparing it to its historical volatility, Zinc One Resources is 1.56 times less risky than Ameriwest Lithium. It trades about 0.0 of its potential returns per unit of risk. Ameriwest Lithium is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Ameriwest Lithium on September 4, 2024 and sell it today you would lose (7.00) from holding Ameriwest Lithium or give up 38.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.9%
Values	Daily Returns

Zinc One Resources  vs.  Ameriwest Lithium

Zinc One Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinc One Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Zinc One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ameriwest Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ameriwest Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Ameriwest Lithium is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zinc One and Ameriwest Lithium

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

The idea behind Zinc One Resources and Ameriwest Lithium 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.