Correlation Between Lion One and ExGen Resources

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

Diversification Opportunities for Lion One and ExGen Resources

-0.2

Correlation Coefficient

Lion One  ExGen Resources

Good diversification

The 3 months correlation between Lion and ExGen is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and ExGen Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExGen Resources 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 ExGen Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExGen Resources has no effect on the direction of Lion One i.e., Lion One and ExGen Resources go up and down completely randomly.

Pair Corralation between Lion One and ExGen Resources

Assuming the 90 days horizon Lion One Metals is expected to generate 0.82 times more return on investment than ExGen Resources. However, Lion One Metals is 1.23 times less risky than ExGen Resources. It trades about 0.11 of its potential returns per unit of risk. ExGen Resources is currently generating about 0.06 per unit of risk. If you would invest  23.00  in Lion One Metals on December 28, 2024 and sell it today you would earn a total of  9.00  from holding Lion One Metals or generate 39.13% return on investment over 90 days.

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

Lion One Metals  vs.  ExGen Resources

Lion One Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lion One Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lion One showed solid returns over the last few months and may actually be approaching a breakup point.

ExGen Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ExGen Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ExGen Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion One and ExGen Resources

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

The idea behind Lion One Metals and ExGen Resources 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.