Correlation Between Lion One and Oculus VisionTech

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

Diversification Opportunities for Lion One and Oculus VisionTech

-0.51

Correlation Coefficient

Lion One  Oculus VisionTech

Excellent diversification

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

Pair Corralation between Lion One and Oculus VisionTech

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Oculus VisionTech. But the stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 2.39 times less risky than Oculus VisionTech. The stock trades about -0.1 of its potential returns per unit of risk. The Oculus VisionTech is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.50  in Oculus VisionTech on September 13, 2024 and sell it today you would earn a total of  2.50  from holding Oculus VisionTech or generate 55.56% return on investment over 90 days.

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

Lion One Metals  vs.  Oculus VisionTech

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 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.

Oculus VisionTech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oculus VisionTech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Oculus VisionTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion One and Oculus VisionTech

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

The idea behind Lion One Metals and Oculus VisionTech 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.