Correlation Between Foremost Lithium and Sigma Lithium
Can any of the company-specific risk be diversified away by investing in both Foremost Lithium and Sigma 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 Foremost Lithium and Sigma Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foremost Lithium Resource and Sigma Lithium Resources, you can compare the effects of market volatilities on Foremost Lithium and Sigma 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 Foremost Lithium with a short position of Sigma Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foremost Lithium and Sigma Lithium.
Diversification Opportunities for Foremost Lithium and Sigma Lithium
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Foremost and Sigma is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Foremost Lithium Resource and Sigma Lithium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigma Lithium Resources and Foremost 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 Foremost Lithium Resource are associated (or correlated) with Sigma Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigma Lithium Resources has no effect on the direction of Foremost Lithium i.e., Foremost Lithium and Sigma Lithium go up and down completely randomly.
Pair Corralation between Foremost Lithium and Sigma Lithium
Given the investment horizon of 90 days Foremost Lithium Resource is expected to generate 2.42 times more return on investment than Sigma Lithium. However, Foremost Lithium is 2.42 times more volatile than Sigma Lithium Resources. It trades about 0.06 of its potential returns per unit of risk. Sigma Lithium Resources is currently generating about -0.07 per unit of risk. If you would invest 247.00 in Foremost Lithium Resource on March 21, 2025 and sell it today you would earn a total of 83.00 from holding Foremost Lithium Resource or generate 33.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foremost Lithium Resource vs. Sigma Lithium Resources
Performance |
| Timeline |
| Foremost Lithium Resource |
| Sigma Lithium Resources |
Foremost Lithium and Sigma Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foremost Lithium and Sigma Lithium
The main advantage of trading using opposite Foremost Lithium and Sigma Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foremost Lithium position performs unexpectedly, Sigma 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 Sigma Lithium will offset losses from the drop in Sigma Lithium's long position.| Foremost Lithium vs. Enlight Renewable Energy | Foremost Lithium vs. Energy Transfer LP | Foremost Lithium vs. Eastman Kodak Co | Foremost Lithium vs. Artisan Consumer Goods |
| Sigma Lithium vs. Piedmont Lithium Ltd | Sigma Lithium vs. Standard Lithium | Sigma Lithium vs. MP Materials Corp | Sigma Lithium vs. Vale SA ADR |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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