Correlation Between Lion Electric and CubicFarm Systems

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

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

Diversification Opportunities for Lion Electric and CubicFarm Systems

0.0

Correlation Coefficient

Lion Electric  CubicFarm Systems

Pay attention - limited upside

The 3 months correlation between Lion and CubicFarm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lion Electric Corp and CubicFarm Systems Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubicFarm Systems Corp and Lion Electric 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 Lion Electric Corp are associated (or correlated) with CubicFarm Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubicFarm Systems Corp has no effect on the direction of Lion Electric i.e., Lion Electric and CubicFarm Systems go up and down completely randomly.

Pair Corralation between Lion Electric and CubicFarm Systems

If you would invest  5.00  in CubicFarm Systems Corp on December 28, 2024 and sell it today you would earn a total of  14.00  from holding CubicFarm Systems Corp or generate 280.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lion Electric Corp  vs.  CubicFarm Systems Corp

Lion Electric Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lion Electric Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Lion Electric is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CubicFarm Systems Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CubicFarm Systems Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, CubicFarm Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion Electric and CubicFarm Systems

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

The idea behind Lion Electric Corp and CubicFarm Systems Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..