Correlation Between LAKE RESOURCES and Albertsons Companies

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Can any of the company-specific risk be diversified away by investing in both LAKE RESOURCES and Albertsons Companies 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 Albertsons Companies 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 Albertsons Companies, you can compare the effects of market volatilities on LAKE RESOURCES and Albertsons Companies 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 Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE RESOURCES and Albertsons Companies.

Diversification Opportunities for LAKE RESOURCES and Albertsons Companies

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between LLKKF and Albertsons is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding LAKE RESOURCES NL and Albertsons Companies Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies 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 Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of LAKE RESOURCES i.e., LAKE RESOURCES and Albertsons Companies go up and down completely randomly.

Pair Corralation between LAKE RESOURCES and Albertsons Companies

Assuming the 90 days horizon LAKE RESOURCES NL is expected to generate 2.61 times more return on investment than Albertsons Companies. However, LAKE RESOURCES is 2.61 times more volatile than Albertsons Companies. It trades about 0.04 of its potential returns per unit of risk. Albertsons Companies is currently generating about -0.03 per unit of risk. If you would invest  59.00  in LAKE RESOURCES NL on August 29, 2022 and sell it today you would earn a total of  8.00  from holding LAKE RESOURCES NL or generate 13.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

LAKE RESOURCES NL  vs.  Albertsons Companies Inc

 Performance (%) 
       Timeline  
LAKE RESOURCES NL 
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 rather sound forward-looking signals, LAKE RESOURCES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

LLKKF Price Channel

Albertsons Companies 
Albertsons Performance
0 of 100
Over the last 90 days Albertsons Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Albertsons Companies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Albertsons Price Channel

LAKE RESOURCES and Albertsons Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LAKE RESOURCES and Albertsons Companies

The main advantage of trading using opposite LAKE RESOURCES and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE RESOURCES position performs unexpectedly, Albertsons Companies 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.
LAKE RESOURCES vs. Nano Mobile Healthcare
The idea behind LAKE RESOURCES NL and Albertsons Companies 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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