Correlation Between Eskay Mining and Lion One

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

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

Diversification Opportunities for Eskay Mining and Lion One

0.02

Correlation Coefficient

Eskay Mining  Lion One

Significant diversification

The 3 months correlation between Eskay and Lion is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp 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 Eskay Mining 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 Eskay Mining Corp 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 Eskay Mining i.e., Eskay Mining and Lion One go up and down completely randomly.

Pair Corralation between Eskay Mining and Lion One

Assuming the 90 days horizon Eskay Mining Corp is expected to generate 0.74 times more return on investment than Lion One. However, Eskay Mining Corp is 1.35 times less risky than Lion One. It trades about 0.19 of its potential returns per unit of risk. Lion One Metals is currently generating about 0.11 per unit of risk. If you would invest  18.00  in Eskay Mining Corp on December 28, 2024 and sell it today you would earn a total of  12.00  from holding Eskay Mining Corp or generate 66.67% return on investment over 90 days.

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

Eskay Mining Corp  vs.  Lion One Metals

Eskay Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eskay Mining Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eskay Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Lion One Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lion One Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lion One showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eskay Mining and Lion One

The main advantage of trading using opposite Eskay Mining and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eskay Mining 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 Eskay Mining Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.