Correlation Between Lion Electric and Solitron Devices

Can any of the company-specific risk be diversified away by investing in both Lion Electric and Solitron Devices 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 Solitron Devices 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 Solitron Devices, you can compare the effects of market volatilities on Lion Electric and Solitron Devices 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 Solitron Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Electric and Solitron Devices.

Diversification Opportunities for Lion Electric and Solitron Devices

0.0

Correlation Coefficient

Lion Electric  Solitron Devices

Pay attention - limited upside

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

Pair Corralation between Lion Electric and Solitron Devices

If you would invest (100.00) in Lion Electric Corp on December 4, 2024 and sell it today you would earn a total of  100.00  from holding Lion Electric Corp or generate -100.0% 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.  Solitron Devices

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.

Solitron Devices

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solitron Devices has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Solitron Devices is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Lion Electric and Solitron Devices

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

The idea behind Lion Electric Corp and Solitron Devices 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..