Correlation Between Lion One and BLAC Old

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

Diversification Opportunities for Lion One and BLAC Old

-0.2

Correlation Coefficient

Lion One  BLAC Old

Good diversification

The 3 months correlation between Lion and BLAC is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and BLAC Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLAC Old 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 BLAC Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLAC Old has no effect on the direction of Lion One i.e., Lion One and BLAC Old go up and down completely randomly.

Pair Corralation between Lion One and BLAC Old

Assuming the 90 days horizon Lion One Metals is expected to generate 0.5 times more return on investment than BLAC Old. However, Lion One Metals is 2.01 times less risky than BLAC Old. It trades about 0.1 of its potential returns per unit of risk. BLAC Old is currently generating about -0.22 per unit of risk. If you would invest  17.00  in Lion One Metals on December 28, 2024 and sell it today you would earn a total of  5.00  from holding Lion One Metals or generate 29.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.0%
Values	Daily Returns

Lion One Metals  vs.  BLAC Old

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. Despite nearly weak essential indicators, Lion One reported solid returns over the last few months and may actually be approaching a breakup point.

BLAC Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days BLAC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Lion One and BLAC Old

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

The idea behind Lion One Metals and BLAC Old 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.