Correlation Between Lion One and Porsche Automobil

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

Diversification Opportunities for Lion One and Porsche Automobil

0.65

Correlation Coefficient

Lion One  Porsche Automobil

Poor diversification

The 3 months correlation between Lion and Porsche is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Porsche Automobil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porsche Automobil Holding 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 Porsche Automobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porsche Automobil Holding has no effect on the direction of Lion One i.e., Lion One and Porsche Automobil go up and down completely randomly.

Pair Corralation between Lion One and Porsche Automobil

Assuming the 90 days horizon Lion One Metals is expected to generate 3.13 times more return on investment than Porsche Automobil. However, Lion One is 3.13 times more volatile than Porsche Automobil Holding. It trades about -0.03 of its potential returns per unit of risk. Porsche Automobil Holding is currently generating about -0.1 per unit of risk. If you would invest  19.00  in Lion One Metals on September 13, 2024 and sell it today you would lose (3.00) from holding Lion One Metals or give up 15.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Lion One Metals  vs.  Porsche Automobil Holding

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Porsche Automobil Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Porsche Automobil Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lion One and Porsche Automobil

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

The idea behind Lion One Metals and Porsche Automobil Holding 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.