Correlation Between Lion One and Supercom

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

Diversification Opportunities for Lion One and Supercom

0.53

Correlation Coefficient

Lion One  Supercom

Very weak diversification

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

Pair Corralation between Lion One and Supercom

Assuming the 90 days horizon Lion One is expected to generate 3.18 times less return on investment than Supercom. But when comparing it to its historical volatility, Lion One Metals is 2.23 times less risky than Supercom. It trades about 0.1 of its potential returns per unit of risk. Supercom is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  371.00  in Supercom on December 26, 2024 and sell it today you would earn a total of  343.00  from holding Supercom or generate 92.45% 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.  Supercom

Lion One Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lion One Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Lion One reported solid returns over the last few months and may actually be approaching a breakup point.

Supercom

Risk-Adjusted Performance

OK

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

Pair Trading with Lion One and Supercom

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

The idea behind Lion One Metals and Supercom 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.