Correlation Between Lion One and EAGLE MATERIALS

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

Diversification Opportunities for Lion One and EAGLE MATERIALS

-0.11

Correlation Coefficient

Lion One  EAGLE MATERIALS

Good diversification

The 3 months correlation between Lion and EAGLE is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and EAGLE MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAGLE MATERIALS 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 EAGLE MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAGLE MATERIALS has no effect on the direction of Lion One i.e., Lion One and EAGLE MATERIALS go up and down completely randomly.

Pair Corralation between Lion One and EAGLE MATERIALS

Assuming the 90 days horizon Lion One Metals is expected to generate 3.95 times more return on investment than EAGLE MATERIALS. However, Lion One is 3.95 times more volatile than EAGLE MATERIALS. It trades about 0.02 of its potential returns per unit of risk. EAGLE MATERIALS is currently generating about -0.27 per unit of risk. If you would invest  19.00  in Lion One Metals on November 29, 2024 and sell it today you would lose (1.00) from holding Lion One Metals or give up 5.26% of portfolio value over 90 days.

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

Lion One Metals  vs.  EAGLE MATERIALS

Lion One Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lion One Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lion One may actually be approaching a critical reversion point that can send shares even higher in March 2025.

EAGLE MATERIALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days EAGLE MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Lion One and EAGLE MATERIALS

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

The idea behind Lion One Metals and EAGLE MATERIALS 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.