Correlation Between Flexible Solutions and Lionheart Holdings

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

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

Diversification Opportunities for Flexible Solutions and Lionheart Holdings

0.36

Correlation Coefficient

Flexible Solutions  Lionheart Holdings

Weak diversification

The 3 months correlation between Flexible and Lionheart is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Lionheart Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionheart Holdings and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with Lionheart Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionheart Holdings has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and Lionheart Holdings go up and down completely randomly.

Pair Corralation between Flexible Solutions and Lionheart Holdings

Considering the 90-day investment horizon Flexible Solutions International is expected to generate 84.16 times more return on investment than Lionheart Holdings. However, Flexible Solutions is 84.16 times more volatile than Lionheart Holdings. It trades about 0.11 of its potential returns per unit of risk. Lionheart Holdings is currently generating about 0.24 per unit of risk. If you would invest  361.00  in Flexible Solutions International on December 29, 2024 and sell it today you would earn a total of  154.00  from holding Flexible Solutions International or generate 42.66% return on investment over 90 days.

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

Flexible Solutions Internation  vs.  Lionheart Holdings

Flexible Solutions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flexible Solutions International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Flexible Solutions demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lionheart Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lionheart Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lionheart Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Flexible Solutions and Lionheart Holdings

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

The idea behind Flexible Solutions International and Lionheart Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.