Correlation Between Piedmont Lithium and FMC

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

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

Diversification Opportunities for Piedmont Lithium and FMC

-0.07

Correlation Coefficient

Piedmont Lithium  FMC

Good diversification

The 3 months correlation between Piedmont and FMC is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Piedmont Lithium Ltd and FMC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FMC Corporation and Piedmont 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 Piedmont Lithium Ltd are associated (or correlated) with FMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FMC Corporation has no effect on the direction of Piedmont Lithium i.e., Piedmont Lithium and FMC go up and down completely randomly.

Pair Corralation between Piedmont Lithium and FMC

Considering the 90-day investment horizon Piedmont Lithium is expected to generate 3.01 times less return on investment than FMC. In addition to that, Piedmont Lithium is 1.86 times more volatile than FMC Corporation. It trades about 0.01 of its total potential returns per unit of risk. FMC Corporation is currently generating about 0.06 per unit of volatility. If you would invest  3,517  in FMC Corporation on May 6, 2025 and sell it today you would earn a total of  284.00  from holding FMC Corporation or generate 8.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Piedmont Lithium Ltd  vs.  FMC Corp.

Piedmont Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Piedmont Lithium Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Piedmont Lithium is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

FMC Corporation

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FMC Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, FMC may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Piedmont Lithium and FMC

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

The idea behind Piedmont Lithium Ltd and FMC Corporation 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.