Correlation Between Lion One and Joint Stock

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

Diversification Opportunities for Lion One and Joint Stock

0.38

Correlation Coefficient

Lion One  Joint Stock

Weak diversification

The 3 months correlation between Lion and Joint is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of Lion One i.e., Lion One and Joint Stock go up and down completely randomly.

Pair Corralation between Lion One and Joint Stock

Assuming the 90 days horizon Lion One Metals is expected to generate 2.63 times more return on investment than Joint Stock. However, Lion One is 2.63 times more volatile than Joint Stock. It trades about 0.2 of its potential returns per unit of risk. Joint Stock is currently generating about -0.14 per unit of risk. If you would invest  18.00  in Lion One Metals on October 22, 2024 and sell it today you would earn a total of  3.00  from holding Lion One Metals or generate 16.67% return on investment over 90 days.

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

Lion One Metals  vs.  Joint Stock

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 weak 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.

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Lion One and Joint Stock

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

The idea behind Lion One Metals and Joint Stock 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.