Correlation Between Lion One and 631005BJ3

Can any of the company-specific risk be diversified away by investing in both Lion One and 631005BJ3 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 631005BJ3 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 US631005BJ39, you can compare the effects of market volatilities on Lion One and 631005BJ3 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 631005BJ3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and 631005BJ3.

Diversification Opportunities for Lion One and 631005BJ3

-0.44

Correlation Coefficient

Lion One  631005BJ3

Very good diversification

The 3 months correlation between Lion and 631005BJ3 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and US631005BJ39 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US631005BJ39 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 631005BJ3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US631005BJ39 has no effect on the direction of Lion One i.e., Lion One and 631005BJ3 go up and down completely randomly.

Pair Corralation between Lion One and 631005BJ3

Assuming the 90 days horizon Lion One is expected to generate 3.21 times less return on investment than 631005BJ3. In addition to that, Lion One is 3.43 times more volatile than US631005BJ39. It trades about 0.02 of its total potential returns per unit of risk. US631005BJ39 is currently generating about 0.21 per unit of volatility. If you would invest  9,239  in US631005BJ39 on October 11, 2024 and sell it today you would earn a total of  309.00  from holding US631005BJ39 or generate 3.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	35.0%
Values	Daily Returns

Lion One Metals  vs.  US631005BJ39

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.

US631005BJ39

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US631005BJ39 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 631005BJ3 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lion One and 631005BJ3

The main advantage of trading using opposite Lion One and 631005BJ3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, 631005BJ3 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 631005BJ3 will offset losses from the drop in 631005BJ3's long position.

The idea behind Lion One Metals and US631005BJ39 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.