Correlation Between Lion One and Sable Offshore

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

Diversification Opportunities for Lion One and Sable Offshore

-0.28

Correlation Coefficient

Lion One  Sable Offshore

Very good diversification

The 3 months correlation between Lion and Sable is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore 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 Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of Lion One i.e., Lion One and Sable Offshore go up and down completely randomly.

Pair Corralation between Lion One and Sable Offshore

Assuming the 90 days horizon Lion One Metals is expected to generate 0.8 times more return on investment than Sable Offshore. However, Lion One Metals is 1.25 times less risky than Sable Offshore. It trades about 0.14 of its potential returns per unit of risk. Sable Offshore Corp is currently generating about 0.07 per unit of risk. If you would invest  19.00  in Lion One Metals on October 12, 2024 and sell it today you would earn a total of  2.00  from holding Lion One Metals or generate 10.53% return on investment over 90 days.

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

Lion One Metals  vs.  Sable Offshore 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 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.

Sable Offshore Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Offshore Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Sable Offshore exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion One and Sable Offshore

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

The idea behind Lion One Metals and Sable Offshore 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.