Correlation Between Lion One and Blue Sky

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

Diversification Opportunities for Lion One and Blue Sky

0.18

Correlation Coefficient

Lion One  Blue Sky

Average diversification

The 3 months correlation between Lion and Blue is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Blue Sky Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Sky Uranium 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 Blue Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Sky Uranium has no effect on the direction of Lion One i.e., Lion One and Blue Sky go up and down completely randomly.

Pair Corralation between Lion One and Blue Sky

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Blue Sky. But the stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 2.71 times less risky than Blue Sky. The stock trades about -0.02 of its potential returns per unit of risk. The Blue Sky Uranium is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6.43  in Blue Sky Uranium on December 2, 2024 and sell it today you would lose (1.45) from holding Blue Sky Uranium or give up 22.55% of portfolio value over 90 days.

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

Lion One Metals  vs.  Blue Sky Uranium

Lion One Metals

Risk-Adjusted Performance

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 nearly stable basic indicators, Lion One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Blue Sky Uranium

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Sky Uranium are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Blue Sky reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion One and Blue Sky

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

The idea behind Lion One Metals and Blue Sky Uranium 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.