Correlation Between Lion One and Inovalis Real

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

Diversification Opportunities for Lion One and Inovalis Real

-0.51

Correlation Coefficient

Lion One  Inovalis Real

Excellent diversification

The 3 months correlation between Lion and Inovalis is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Inovalis Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inovalis Real Estate 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 Inovalis Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inovalis Real Estate has no effect on the direction of Lion One i.e., Lion One and Inovalis Real go up and down completely randomly.

Pair Corralation between Lion One and Inovalis Real

Assuming the 90 days horizon Lion One Metals is expected to generate 1.46 times more return on investment than Inovalis Real. However, Lion One is 1.46 times more volatile than Inovalis Real Estate. It trades about 0.01 of its potential returns per unit of risk. Inovalis Real Estate is currently generating about -0.01 per unit of risk. If you would invest  28.00  in Lion One Metals on December 2, 2024 and sell it today you would lose (2.00) from holding Lion One Metals or give up 7.14% of portfolio value over 90 days.

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

Lion One Metals  vs.  Inovalis Real Estate

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.

Inovalis Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inovalis Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Inovalis Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lion One and Inovalis Real

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

The idea behind Lion One Metals and Inovalis Real Estate 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.