Correlation Between Lion Biotechnologies and UMWELTBANK

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

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

Diversification Opportunities for Lion Biotechnologies and UMWELTBANK

-0.18

Correlation Coefficient

Lion Biotechnologies  UMWELTBANK

Good diversification

The 3 months correlation between Lion and UMWELTBANK is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and UMWELTBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMWELTBANK and Lion Biotechnologies 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 Biotechnologies are associated (or correlated) with UMWELTBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMWELTBANK has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and UMWELTBANK go up and down completely randomly.

Pair Corralation between Lion Biotechnologies and UMWELTBANK

Assuming the 90 days trading horizon Lion Biotechnologies is expected to under-perform the UMWELTBANK. In addition to that, Lion Biotechnologies is 1.41 times more volatile than UMWELTBANK. It trades about -0.32 of its total potential returns per unit of risk. UMWELTBANK is currently generating about -0.04 per unit of volatility. If you would invest  618.00  in UMWELTBANK on September 27, 2024 and sell it today you would lose (14.00) from holding UMWELTBANK or give up 2.27% of portfolio value over 90 days.

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

Lion Biotechnologies  vs.  UMWELTBANK

Lion Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

UMWELTBANK

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UMWELTBANK are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking signals, UMWELTBANK exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion Biotechnologies and UMWELTBANK

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

The idea behind Lion Biotechnologies and UMWELTBANK 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.