Correlation Between Lion One and Sun Peak

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

Diversification Opportunities for Lion One and Sun Peak

-0.09

Correlation Coefficient

Lion One  Sun Peak

Good diversification

The 3 months correlation between Lion and Sun is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals 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 Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Lion One i.e., Lion One and Sun Peak go up and down completely randomly.

Pair Corralation between Lion One and Sun Peak

Assuming the 90 days horizon Lion One Metals is expected to generate 1.26 times more return on investment than Sun Peak. However, Lion One is 1.26 times more volatile than Sun Peak Metals. It trades about 0.09 of its potential returns per unit of risk. Sun Peak Metals is currently generating about -0.02 per unit of risk. If you would invest  26.00  in Lion One Metals on December 19, 2024 and sell it today you would earn a total of  7.00  from holding Lion One Metals or generate 26.92% 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.  Sun Peak Metals

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 7 (%) 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.

Sun Peak Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating 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.

Pair Trading with Lion One and Sun Peak

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

The idea behind Lion One Metals and Sun Peak Metals 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..