Correlation Between Golden Star and Lion One

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

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

Diversification Opportunities for Golden Star and Lion One

0.45

Correlation Coefficient

Golden Star  Lion One

Very weak diversification

The 3 months correlation between Golden and Lion is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Golden Star Resource 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 Golden Star 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 Golden Star Resource 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 Golden Star i.e., Golden Star and Lion One go up and down completely randomly.

Pair Corralation between Golden Star and Lion One

Given the investment horizon of 90 days Golden Star Resource is expected to generate 0.65 times more return on investment than Lion One. However, Golden Star Resource is 1.54 times less risky than Lion One. It trades about 0.12 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  100.00  in Golden Star Resource on September 3, 2024 and sell it today you would earn a total of  15.00  from holding Golden Star Resource or generate 15.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Golden Star Resource  vs.  Lion One Metals

Golden Star Resource

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Star Resource are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Golden Star unveiled 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 Golden Star and Lion One

The main advantage of trading using opposite Golden Star and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Star 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 Golden Star Resource 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.