Correlation Between Lion Financial and Bynordic Acquisition

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

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

Diversification Opportunities for Lion Financial and Bynordic Acquisition

-0.35

Correlation Coefficient

Lion Financial  Bynordic Acquisition

Very good diversification

The 3 months correlation between Lion and Bynordic is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group and Bynordic Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bynordic Acquisition Corp and Lion Financial 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 Financial Group are associated (or correlated) with Bynordic Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bynordic Acquisition Corp has no effect on the direction of Lion Financial i.e., Lion Financial and Bynordic Acquisition go up and down completely randomly.

Pair Corralation between Lion Financial and Bynordic Acquisition

Assuming the 90 days horizon Lion Financial Group is expected to generate 22.52 times more return on investment than Bynordic Acquisition. However, Lion Financial is 22.52 times more volatile than Bynordic Acquisition Corp. It trades about 0.0 of its potential returns per unit of risk. Bynordic Acquisition Corp is currently generating about -0.2 per unit of risk. If you would invest  0.73  in Lion Financial Group on December 20, 2024 and sell it today you would lose (0.09) from holding Lion Financial Group or give up 12.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.41%
Values	Daily Returns

Lion Financial Group  vs.  Bynordic Acquisition Corp

Lion Financial Group

Risk-Adjusted Performance

Very Weak

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

Bynordic Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bynordic Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bynordic Acquisition is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lion Financial and Bynordic Acquisition

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

The idea behind Lion Financial Group and Bynordic Acquisition 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 Stocks Directory module to find actively traded stocks across global markets.