Correlation Between Lion Chemtech and BitNine

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

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

Diversification Opportunities for Lion Chemtech and BitNine

0.36

Correlation Coefficient

Lion Chemtech  BitNine

Weak diversification

The 3 months correlation between Lion and BitNine is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and BitNine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitNine and Lion Chemtech 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 Lion Chemtech Co are associated (or correlated) with BitNine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitNine has no effect on the direction of Lion Chemtech i.e., Lion Chemtech and BitNine go up and down completely randomly.

Pair Corralation between Lion Chemtech and BitNine

Assuming the 90 days trading horizon Lion Chemtech Co is expected to under-perform the BitNine. But the stock apears to be less risky and, when comparing its historical volatility, Lion Chemtech Co is 1.71 times less risky than BitNine. The stock trades about -0.01 of its potential returns per unit of risk. The BitNine Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  442,047  in BitNine Co on October 3, 2024 and sell it today you would lose (214,047) from holding BitNine Co or give up 48.42% of portfolio value over 90 days.

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

Lion Chemtech Co  vs.  BitNine Co

Lion Chemtech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lion Chemtech Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lion Chemtech sustained solid returns over the last few months and may actually be approaching a breakup point.

BitNine

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BitNine Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BitNine sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion Chemtech and BitNine

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

The idea behind Lion Chemtech Co and BitNine Co 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.