Correlation Between LAKE RESOURCES and Aaon

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Can any of the company-specific risk be diversified away by investing in both LAKE RESOURCES and Aaon 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 LAKE RESOURCES and Aaon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAKE RESOURCES NL and Aaon Inc, you can compare the effects of market volatilities on LAKE RESOURCES and Aaon 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 LAKE RESOURCES with a short position of Aaon. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE RESOURCES and Aaon.

Diversification Opportunities for LAKE RESOURCES and Aaon

  Correlation Coefficient

Average diversification

The 3 months correlation between LLKKF and Aaon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding LAKE RESOURCES NL and Aaon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aaon Inc and LAKE RESOURCES 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 LAKE RESOURCES NL are associated (or correlated) with Aaon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aaon Inc has no effect on the direction of LAKE RESOURCES i.e., LAKE RESOURCES and Aaon go up and down completely randomly.

Pair Corralation between LAKE RESOURCES and Aaon

Assuming the 90 days horizon LAKE RESOURCES NL is expected to generate 4.34 times more return on investment than Aaon. However, LAKE RESOURCES is 4.34 times more volatile than Aaon Inc. It trades about 0.09 of its potential returns per unit of risk. Aaon Inc is currently generating about 0.03 per unit of risk. If you would invest  6.25  in LAKE RESOURCES NL on August 30, 2022 and sell it today you would earn a total of  55.75  from holding LAKE RESOURCES NL or generate 892.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns


 Performance (%) 
LLKKF Performance
0 of 100
Over the last 90 days LAKE RESOURCES NL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

LLKKF Price Channel

Aaon Inc 
Aaon Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aaon Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Aaon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aaon Price Channel

LAKE RESOURCES and Aaon Volatility Contrast

   Predicted Return Density   

Pair Trading with LAKE RESOURCES and Aaon

The main advantage of trading using opposite LAKE RESOURCES and Aaon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE RESOURCES position performs unexpectedly, Aaon 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 Aaon will offset losses from the drop in Aaon's long position.
The idea behind LAKE RESOURCES NL and Aaon Inc 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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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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