Correlation Between LION ONE and Sabre Insurance

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

Diversification Opportunities for LION ONE and Sabre Insurance

0.05

Correlation Coefficient

LION ONE  Sabre Insurance

Significant diversification

The 3 months correlation between LION and Sabre is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group 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 Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of LION ONE i.e., LION ONE and Sabre Insurance go up and down completely randomly.

Pair Corralation between LION ONE and Sabre Insurance

Assuming the 90 days trading horizon LION ONE METALS is expected to generate 3.8 times more return on investment than Sabre Insurance. However, LION ONE is 3.8 times more volatile than Sabre Insurance Group. It trades about 0.15 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about -0.05 per unit of risk. If you would invest  16.00  in LION ONE METALS on October 17, 2024 and sell it today you would earn a total of  3.00  from holding LION ONE METALS or generate 18.75% return on investment over 90 days.

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

LION ONE METALS  vs.  Sabre Insurance Group

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. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sabre Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabre Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sabre Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LION ONE and Sabre Insurance

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

The idea behind LION ONE METALS and Sabre Insurance Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.