Correlation Between Lion One and Big Ridge

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

Diversification Opportunities for Lion One and Big Ridge

0.57

Correlation Coefficient

Lion One  Big Ridge

Very weak diversification

The 3 months correlation between Lion and Big is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold 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 Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Lion One i.e., Lion One and Big Ridge go up and down completely randomly.

Pair Corralation between Lion One and Big Ridge

Assuming the 90 days horizon Lion One Metals is expected to generate 0.62 times more return on investment than Big Ridge. However, Lion One Metals is 1.62 times less risky than Big Ridge. It trades about -0.18 of its potential returns per unit of risk. Big Ridge Gold is currently generating about -0.19 per unit of risk. If you would invest  20.00  in Lion One Metals on October 1, 2024 and sell it today you would lose (3.00) from holding Lion One Metals or give up 15.0% of portfolio value over 90 days.

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

Lion One Metals  vs.  Big Ridge Gold

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. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Big Ridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Ridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Big Ridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lion One and Big Ridge

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

The idea behind Lion One Metals and Big Ridge Gold 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.