Correlation Between Lion One and Global Engine

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

Diversification Opportunities for Lion One and Global Engine

0.65

Correlation Coefficient

Lion One  Global Engine

Poor diversification

The 3 months correlation between Lion and Global is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Global Engine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Engine Group 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 Global Engine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Engine Group has no effect on the direction of Lion One i.e., Lion One and Global Engine go up and down completely randomly.

Pair Corralation between Lion One and Global Engine

Assuming the 90 days horizon Lion One Metals is expected to generate 0.49 times more return on investment than Global Engine. However, Lion One Metals is 2.06 times less risky than Global Engine. It trades about -0.05 of its potential returns per unit of risk. Global Engine Group is currently generating about -0.14 per unit of risk. If you would invest  75.00  in Lion One Metals on September 21, 2024 and sell it today you would lose (57.00) from holding Lion One Metals or give up 76.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	13.13%
Values	Daily Returns

Lion One Metals  vs.  Global Engine Group

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.

Global Engine Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lion One and Global Engine

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

The idea behind Lion One Metals and Global Engine Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.