Correlation Between Lion One and Arizona Gold

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

By analyzing existing cross correlation between Lion One Metals and Arizona Gold Silver, you can compare the effects of market volatilities on Lion One and Arizona Gold 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 One with a short position of Arizona Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Arizona Gold.

Diversification Opportunities for Lion One and Arizona Gold

-0.1

Correlation Coefficient

Lion One  Arizona Gold

Good diversification

The 3 months correlation between Lion and Arizona is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Arizona Gold Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Gold Silver and Lion One 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 One Metals are associated (or correlated) with Arizona Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Gold Silver has no effect on the direction of Lion One i.e., Lion One and Arizona Gold go up and down completely randomly.

Pair Corralation between Lion One and Arizona Gold

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Arizona Gold. But the stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 1.13 times less risky than Arizona Gold. The stock trades about -0.04 of its potential returns per unit of risk. The Arizona Gold Silver is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Arizona Gold Silver on December 2, 2024 and sell it today you would lose (4.00) from holding Arizona Gold Silver or give up 10.81% of portfolio value over 90 days.

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

Lion One Metals  vs.  Arizona Gold Silver

Lion One Metals

Risk-Adjusted Performance

Very Weak

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

Arizona Gold Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arizona Gold Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Lion One and Arizona Gold

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

The idea behind Lion One Metals and Arizona Gold Silver 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.