Correlation Between Lion One and Bt Brands

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

Diversification Opportunities for Lion One and Bt Brands

0.62

Correlation Coefficient

Lion One  Bt Brands

Poor diversification

The 3 months correlation between Lion and BTBD is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Lion One i.e., Lion One and Bt Brands go up and down completely randomly.

Pair Corralation between Lion One and Bt Brands

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Bt Brands. But the otc stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 1.47 times less risky than Bt Brands. The otc stock trades about -0.05 of its potential returns per unit of risk. The Bt Brands is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Bt Brands on October 4, 2024 and sell it today you would lose (38.00) from holding Bt Brands or give up 20.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Lion One Metals  vs.  Bt Brands

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Bt Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bt Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lion One and Bt Brands

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

The idea behind Lion One Metals and Bt Brands 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.