Correlation Between Lion One and ESH Acquisition

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

Diversification Opportunities for Lion One and ESH Acquisition

-0.7

Correlation Coefficient

Lion One  ESH Acquisition

Excellent diversification

The 3 months correlation between Lion and ESH is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and ESH Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESH Acquisition Corp 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 ESH Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESH Acquisition Corp has no effect on the direction of Lion One i.e., Lion One and ESH Acquisition go up and down completely randomly.

Pair Corralation between Lion One and ESH Acquisition

Assuming the 90 days horizon Lion One Metals is expected to under-perform the ESH Acquisition. In addition to that, Lion One is 18.81 times more volatile than ESH Acquisition Corp. It trades about -0.05 of its total potential returns per unit of risk. ESH Acquisition Corp is currently generating about 0.09 per unit of volatility. If you would invest  1,009  in ESH Acquisition Corp on September 21, 2024 and sell it today you would earn a total of  72.00  from holding ESH Acquisition Corp or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	77.58%
Values	Daily Returns

Lion One Metals  vs.  ESH Acquisition Corp

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 abnormal 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.

ESH Acquisition Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ESH Acquisition Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, ESH Acquisition is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lion One and ESH Acquisition

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

The idea behind Lion One Metals and ESH Acquisition Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.