Correlation Between Lion Financial and DT Cloud

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

Diversification Opportunities for Lion Financial and DT Cloud

-0.63

Correlation Coefficient

Lion Financial  DT Cloud

Excellent diversification

The 3 months correlation between Lion and DYCQ is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group and DT Cloud Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DT Cloud Acquisition 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 DT Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DT Cloud Acquisition has no effect on the direction of Lion Financial i.e., Lion Financial and DT Cloud go up and down completely randomly.

Pair Corralation between Lion Financial and DT Cloud

Assuming the 90 days horizon Lion Financial Group is expected to under-perform the DT Cloud. In addition to that, Lion Financial is 38.33 times more volatile than DT Cloud Acquisition. It trades about -0.01 of its total potential returns per unit of risk. DT Cloud Acquisition is currently generating about 0.17 per unit of volatility. If you would invest  1,045  in DT Cloud Acquisition on December 19, 2024 and sell it today you would earn a total of  18.00  from holding DT Cloud Acquisition or generate 1.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Lion Financial Group  vs.  DT Cloud Acquisition

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.

DT Cloud Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DT Cloud Acquisition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, DT Cloud is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Lion Financial and DT Cloud

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

The idea behind Lion Financial Group and DT Cloud Acquisition 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.