Correlation Between LION ONE and KRISPY KREME

Can any of the company-specific risk be diversified away by investing in both LION ONE and KRISPY KREME 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 KRISPY KREME 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 KRISPY KREME DL 01, you can compare the effects of market volatilities on LION ONE and KRISPY KREME 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 KRISPY KREME. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and KRISPY KREME.

Diversification Opportunities for LION ONE and KRISPY KREME

0.01

Correlation Coefficient

LION ONE  KRISPY KREME

Significant diversification

The 3 months correlation between LION and KRISPY is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and KRISPY KREME DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRISPY KREME DL 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 KRISPY KREME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRISPY KREME DL has no effect on the direction of LION ONE i.e., LION ONE and KRISPY KREME go up and down completely randomly.

Pair Corralation between LION ONE and KRISPY KREME

Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the KRISPY KREME. In addition to that, LION ONE is 1.52 times more volatile than KRISPY KREME DL 01. It trades about -0.05 of its total potential returns per unit of risk. KRISPY KREME DL 01 is currently generating about -0.02 per unit of volatility. If you would invest  1,017  in KRISPY KREME DL 01 on September 12, 2024 and sell it today you would lose (52.00) from holding KRISPY KREME DL 01 or give up 5.11% 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.  KRISPY KREME DL 01

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 uncertain 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.

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KRISPY KREME 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 KRISPY KREME

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

The idea behind LION ONE METALS and KRISPY KREME DL 01 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.