Correlation Between Lion One and Baselode Energy

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

Diversification Opportunities for Lion One and Baselode Energy

0.67

Correlation Coefficient

Lion One  Baselode Energy

Poor diversification

The 3 months correlation between Lion and Baselode is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Baselode Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baselode Energy Corp 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 Baselode Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baselode Energy Corp has no effect on the direction of Lion One i.e., Lion One and Baselode Energy go up and down completely randomly.

Pair Corralation between Lion One and Baselode Energy

Assuming the 90 days horizon Lion One Metals is expected to generate 0.57 times more return on investment than Baselode Energy. However, Lion One Metals is 1.74 times less risky than Baselode Energy. It trades about -0.05 of its potential returns per unit of risk. Baselode Energy Corp is currently generating about -0.05 per unit of risk. If you would invest  29.00  in Lion One Metals on September 12, 2024 and sell it today you would lose (4.00) from holding Lion One Metals or give up 13.79% of portfolio value over 90 days.

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

Lion One Metals  vs.  Baselode Energy Corp

Lion One Metals

Risk-Adjusted Performance

0 of 100

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Baselode Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baselode Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 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 Baselode Energy

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

The idea behind Lion One Metals and Baselode Energy 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.