Correlation Between Lion Financial and Evergreen Corp

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

Diversification Opportunities for Lion Financial and Evergreen Corp

-0.59

Correlation Coefficient

Lion Financial  Evergreen Corp

Excellent diversification

The 3 months correlation between Lion and Evergreen is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group and Evergreen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen 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 Evergreen Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Corp has no effect on the direction of Lion Financial i.e., Lion Financial and Evergreen Corp go up and down completely randomly.

Pair Corralation between Lion Financial and Evergreen Corp

Assuming the 90 days horizon Lion Financial Group is expected to generate 139.94 times more return on investment than Evergreen Corp. However, Lion Financial is 139.94 times more volatile than Evergreen Corp. It trades about 0.08 of its potential returns per unit of risk. Evergreen Corp is currently generating about 0.41 per unit of risk. If you would invest  0.85  in Lion Financial Group on October 4, 2024 and sell it today you would earn a total of  0.06  from holding Lion Financial Group or generate 7.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lion Financial Group  vs.  Evergreen Corp

Lion Financial Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lion Financial Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Lion Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Evergreen Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Evergreen Corp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Lion Financial and Evergreen Corp

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

The idea behind Lion Financial Group and Evergreen 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.