Correlation Between LION ONE and Charter Communications

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

Diversification Opportunities for LION ONE and Charter Communications

-0.68

Correlation Coefficient

LION ONE  Charter Communications

Excellent diversification

The 3 months correlation between LION and Charter is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of LION ONE i.e., LION ONE and Charter Communications go up and down completely randomly.

Pair Corralation between LION ONE and Charter Communications

Assuming the 90 days trading horizon LION ONE METALS is expected to generate 2.61 times more return on investment than Charter Communications. However, LION ONE is 2.61 times more volatile than Charter Communications. It trades about 0.03 of its potential returns per unit of risk. Charter Communications is currently generating about -0.18 per unit of risk. If you would invest  19.00  in LION ONE METALS on September 23, 2024 and sell it today you would earn a total of  0.00  from holding LION ONE METALS or generate 0.0% return on investment over 90 days.

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

LION ONE METALS  vs.  Charter Communications

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 comparatively stable basic indicators, LION ONE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Charter Communications

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Charter Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LION ONE and Charter Communications

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

The idea behind LION ONE METALS and Charter Communications 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.