Correlation Between Sayona Mining and Standard Lithium

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

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

Diversification Opportunities for Sayona Mining and Standard Lithium

0.49

Correlation Coefficient

Sayona Mining  Standard Lithium

Very weak diversification

The 3 months correlation between Sayona and Standard is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sayona Mining Limited and Standard Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Lithium and Sayona Mining 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 Sayona Mining Limited are associated (or correlated) with Standard Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Lithium has no effect on the direction of Sayona Mining i.e., Sayona Mining and Standard Lithium go up and down completely randomly.

Pair Corralation between Sayona Mining and Standard Lithium

Assuming the 90 days horizon Sayona Mining is expected to generate 1.11 times less return on investment than Standard Lithium. In addition to that, Sayona Mining is 2.47 times more volatile than Standard Lithium. It trades about 0.08 of its total potential returns per unit of risk. Standard Lithium is currently generating about 0.21 per unit of volatility. If you would invest  138.00  in Standard Lithium on May 5, 2025 and sell it today you would earn a total of  91.00  from holding Standard Lithium or generate 65.94% return on investment over 90 days.

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

Sayona Mining Limited  vs.  Standard Lithium

Sayona Mining Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sayona Mining Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sayona Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Standard Lithium

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Lithium are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady essential indicators, Standard Lithium demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sayona Mining and Standard Lithium

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

The idea behind Sayona Mining Limited and Standard Lithium 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 Global Correlations module to find global opportunities by holding instruments from different markets.