Correlation Between Lion One and Mako Mining

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

Diversification Opportunities for Lion One and Mako Mining

0.53

Correlation Coefficient

Lion One  Mako Mining

Very weak diversification

The 3 months correlation between Lion and Mako is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining 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 Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of Lion One i.e., Lion One and Mako Mining go up and down completely randomly.

Pair Corralation between Lion One and Mako Mining

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Mako Mining. In addition to that, Lion One is 1.75 times more volatile than Mako Mining Corp. It trades about -0.01 of its total potential returns per unit of risk. Mako Mining Corp is currently generating about 0.14 per unit of volatility. If you would invest  218.00  in Mako Mining Corp on November 29, 2024 and sell it today you would earn a total of  60.00  from holding Mako Mining Corp or generate 27.52% return on investment over 90 days.

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

Lion One Metals  vs.  Mako Mining Corp

Lion One Metals

Risk-Adjusted Performance

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 nearly stable essential indicators, Lion One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Mako Mining Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mako Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion One and Mako Mining

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

The idea behind Lion One Metals and Mako Mining 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.