Correlation Between Core Lithium and Pure Energy

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

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

Diversification Opportunities for Core Lithium and Pure Energy

0.08

Correlation Coefficient

Core Lithium  Pure Energy

Significant diversification

The 3 months correlation between Core and Pure is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Core Lithium and Pure Energy Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Energy Minerals and Core 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 Core Lithium are associated (or correlated) with Pure Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Energy Minerals has no effect on the direction of Core Lithium i.e., Core Lithium and Pure Energy go up and down completely randomly.

Pair Corralation between Core Lithium and Pure Energy

Assuming the 90 days horizon Core Lithium is expected to generate 4.78 times less return on investment than Pure Energy. In addition to that, Core Lithium is 1.05 times more volatile than Pure Energy Minerals. It trades about 0.03 of its total potential returns per unit of risk. Pure Energy Minerals is currently generating about 0.13 per unit of volatility. If you would invest  14.00  in Pure Energy Minerals on July 18, 2025 and sell it today you would earn a total of  9.00  from holding Pure Energy Minerals or generate 64.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Core Lithium  vs.  Pure Energy Minerals

Core Lithium

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Core Lithium are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Core Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Pure Energy Minerals

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Energy Minerals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Pure Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Core Lithium and Pure Energy

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

The idea behind Core Lithium and Pure Energy Minerals 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.