Correlation Between Cartier Resources and Lion One

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

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

Diversification Opportunities for Cartier Resources and Lion One

0.25

Correlation Coefficient

Cartier Resources  Lion One

Modest diversification

The 3 months correlation between Cartier and Lion is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cartier Resources 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 Cartier Resources 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 Cartier Resources 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 Cartier Resources i.e., Cartier Resources and Lion One go up and down completely randomly.

Pair Corralation between Cartier Resources and Lion One

Assuming the 90 days horizon Cartier Resources is expected to generate 3.66 times more return on investment than Lion One. However, Cartier Resources is 3.66 times more volatile than Lion One Metals. It trades about 0.1 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  5.00  in Cartier Resources on September 4, 2024 and sell it today you would earn a total of  2.00  from holding Cartier Resources or generate 40.0% return on investment over 90 days.

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

Cartier Resources  vs.  Lion One Metals

Cartier Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cartier Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Cartier Resources reported solid returns over the last few months and may actually be approaching a breakup point.

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. Despite nearly stable essential indicators, Lion One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cartier Resources and Lion One

The main advantage of trading using opposite Cartier Resources and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cartier Resources 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 Cartier Resources 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.