Correlation Between Lion One and KINDER

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

Diversification Opportunities for Lion One and KINDER

-0.43

Correlation Coefficient

Lion One  KINDER

Very good diversification

The 3 months correlation between Lion and KINDER is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and KINDER MORGAN FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN FIN 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN FIN has no effect on the direction of Lion One i.e., Lion One and KINDER go up and down completely randomly.

Pair Corralation between Lion One and KINDER

Assuming the 90 days horizon Lion One Metals is expected to generate 2.54 times more return on investment than KINDER. However, Lion One is 2.54 times more volatile than KINDER MORGAN FIN. It trades about 0.2 of its potential returns per unit of risk. KINDER MORGAN FIN is currently generating about -0.18 per unit of risk. If you would invest  18.00  in Lion One Metals on October 11, 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 Against
Strength	Very Weak
Accuracy	38.1%
Values	Daily Returns

Lion One Metals  vs.  KINDER MORGAN FIN

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.

KINDER MORGAN FIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINDER MORGAN FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for KINDER MORGAN FIN investors.

Pair Trading with Lion One and KINDER

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

The idea behind Lion One Metals and KINDER MORGAN FIN 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.