Correlation Between Lion Group and Cathedra Bitcoin

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

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

Diversification Opportunities for Lion Group and Cathedra Bitcoin

0.7

Correlation Coefficient

Lion Group  Cathedra Bitcoin

Poor diversification

The 3 months correlation between Lion and Cathedra is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lion Group Holding and Cathedra Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathedra Bitcoin and Lion Group 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 Group Holding are associated (or correlated) with Cathedra Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathedra Bitcoin has no effect on the direction of Lion Group i.e., Lion Group and Cathedra Bitcoin go up and down completely randomly.

Pair Corralation between Lion Group and Cathedra Bitcoin

Given the investment horizon of 90 days Lion Group Holding is expected to under-perform the Cathedra Bitcoin. In addition to that, Lion Group is 1.11 times more volatile than Cathedra Bitcoin. It trades about -0.13 of its total potential returns per unit of risk. Cathedra Bitcoin is currently generating about -0.11 per unit of volatility. If you would invest  4.88  in Cathedra Bitcoin on December 29, 2024 and sell it today you would lose (2.38) from holding Cathedra Bitcoin or give up 48.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Lion Group Holding  vs.  Cathedra Bitcoin

Lion Group Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lion Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Cathedra Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cathedra Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Lion Group and Cathedra Bitcoin

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

The idea behind Lion Group Holding and Cathedra Bitcoin 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 Global Correlations module to find global opportunities by holding instruments from different markets.