Correlation Between BII Railway and Lion One
Can any of the company-specific risk be diversified away by investing in both BII Railway 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 BII Railway and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Lion One Metals, you can compare the effects of market volatilities on BII Railway 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 BII Railway with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Lion One.
Diversification Opportunities for BII Railway and Lion One
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BII and Lion is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation 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 BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and Lion One go up and down completely randomly.
Pair Corralation between BII Railway and Lion One
Assuming the 90 days horizon BII Railway Transportation is expected to generate 0.78 times more return on investment than Lion One. However, BII Railway Transportation is 1.29 times less risky than Lion One. It trades about 0.03 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.01 per unit of risk. If you would invest 2.50 in BII Railway Transportation on September 10, 2024 and sell it today you would earn a total of 0.05 from holding BII Railway Transportation or generate 2.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BII Railway Transportation vs. Lion One Metals
Performance |
Timeline |
BII Railway Transpor |
Lion One Metals |
BII Railway and Lion One Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BII Railway and Lion One
The main advantage of trading using opposite BII Railway and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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.BII Railway vs. Hollywood Bowl Group | BII Railway vs. Aegean Airlines SA | BII Railway vs. Prosiebensat 1 Media | BII Railway vs. Live Nation Entertainment |
Lion One vs. Dairy Farm International | Lion One vs. Hitachi Construction Machinery | Lion One vs. Sporttotal AG | Lion One vs. TITAN MACHINERY |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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