Correlation Between Computer Modelling and Lion One

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

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

Diversification Opportunities for Computer Modelling and Lion One

0.59

Correlation Coefficient

Computer Modelling  Lion One

Very weak diversification

The 3 months correlation between Computer and Lion is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Computer Modelling Group and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and Computer Modelling 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 Computer Modelling Group are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Computer Modelling i.e., Computer Modelling and Lion One go up and down completely randomly.

Pair Corralation between Computer Modelling and Lion One

Assuming the 90 days trading horizon Computer Modelling Group is expected to generate 0.65 times more return on investment than Lion One. However, Computer Modelling Group is 1.54 times less risky than Lion One. It trades about 0.07 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.06 per unit of risk. If you would invest  554.00  in Computer Modelling Group on September 26, 2024 and sell it today you would earn a total of  499.00  from holding Computer Modelling Group or generate 90.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Computer Modelling Group  vs.  Lion One Metals

Computer Modelling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer Modelling Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Computer Modelling is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Computer Modelling and Lion One

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

The idea behind Computer Modelling Group and Lion One Metals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.