Correlation Between Lion One and Aldel Financial

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

Diversification Opportunities for Lion One and Aldel Financial

0.31

Correlation Coefficient

Lion One  Aldel Financial

Weak diversification

The 3 months correlation between Lion and Aldel is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Aldel Financial II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldel Financial II 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 Aldel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldel Financial II has no effect on the direction of Lion One i.e., Lion One and Aldel Financial go up and down completely randomly.

Pair Corralation between Lion One and Aldel Financial

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Aldel Financial. In addition to that, Lion One is 26.45 times more volatile than Aldel Financial II. It trades about -0.3 of its total potential returns per unit of risk. Aldel Financial II is currently generating about 0.39 per unit of volatility. If you would invest  1,011  in Aldel Financial II on December 2, 2024 and sell it today you would earn a total of  18.00  from holding Aldel Financial II or generate 1.78% return on investment over 90 days.

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

Lion One Metals  vs.  Aldel Financial II

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. Despite nearly stable essential indicators, Lion One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aldel Financial II

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lion One and Aldel Financial

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

The idea behind Lion One Metals and Aldel Financial II 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.