Correlation Between LION ONE and Japan Post

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

Diversification Opportunities for LION ONE and Japan Post

-0.55

Correlation Coefficient

LION ONE  Japan Post

Excellent diversification

The 3 months correlation between LION and Japan is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Japan Post Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Post Insurance 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 Japan Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Post Insurance has no effect on the direction of LION ONE i.e., LION ONE and Japan Post go up and down completely randomly.

Pair Corralation between LION ONE and Japan Post

Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Japan Post. In addition to that, LION ONE is 2.13 times more volatile than Japan Post Insurance. It trades about -0.04 of its total potential returns per unit of risk. Japan Post Insurance is currently generating about 0.04 per unit of volatility. If you would invest  1,510  in Japan Post Insurance on September 5, 2024 and sell it today you would earn a total of  490.00  from holding Japan Post Insurance or generate 32.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

LION ONE METALS  vs.  Japan Post Insurance

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.

Japan Post Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Post Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Japan Post unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LION ONE and Japan Post

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

The idea behind LION ONE METALS and Japan Post Insurance 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..