Correlation Between Frontier Lithium and Portofino Resources

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

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

Diversification Opportunities for Frontier Lithium and Portofino Resources

0.27

Correlation Coefficient

Frontier Lithium  Portofino Resources

Modest diversification

The 3 months correlation between Frontier and Portofino is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Lithium and Portofino Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portofino Resources and Frontier 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 Frontier Lithium are associated (or correlated) with Portofino Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portofino Resources has no effect on the direction of Frontier Lithium i.e., Frontier Lithium and Portofino Resources go up and down completely randomly.

Pair Corralation between Frontier Lithium and Portofino Resources

Assuming the 90 days horizon Frontier Lithium is expected to generate 0.33 times more return on investment than Portofino Resources. However, Frontier Lithium is 3.07 times less risky than Portofino Resources. It trades about -0.05 of its potential returns per unit of risk. Portofino Resources is currently generating about -0.03 per unit of risk. If you would invest  39.00  in Frontier Lithium on May 5, 2025 and sell it today you would lose (3.00) from holding Frontier Lithium or give up 7.69% of portfolio value over 90 days.

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

Frontier Lithium  vs.  Portofino Resources

Frontier Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frontier Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Portofino Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Portofino Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Portofino Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Frontier Lithium and Portofino Resources

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

The idea behind Frontier Lithium and Portofino Resources 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.