Correlation Between LION ONE and East Japan
Can any of the company-specific risk be diversified away by investing in both LION ONE and East Japan 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 East Japan 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 East Japan Railway, you can compare the effects of market volatilities on LION ONE and East Japan 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 East Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and East Japan.
Diversification Opportunities for LION ONE and East Japan
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LION and East is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and East Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Japan Railway 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 East Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Japan Railway has no effect on the direction of LION ONE i.e., LION ONE and East Japan go up and down completely randomly.
Pair Corralation between LION ONE and East Japan
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the East Japan. In addition to that, LION ONE is 4.29 times more volatile than East Japan Railway. It trades about -0.08 of its total potential returns per unit of risk. East Japan Railway is currently generating about -0.16 per unit of volatility. If you would invest 1,780 in East Japan Railway on September 25, 2024 and sell it today you would lose (103.00) from holding East Japan Railway or give up 5.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
LION ONE METALS vs. East Japan Railway
Performance |
Timeline |
LION ONE METALS |
East Japan Railway |
LION ONE and East Japan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LION ONE and East Japan
The main advantage of trading using opposite LION ONE and East Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, East Japan 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 East Japan will offset losses from the drop in East Japan's long position.LION ONE vs. Boyd Gaming | LION ONE vs. ANGLER GAMING PLC | LION ONE vs. CI GAMES SA | LION ONE vs. EAST SIDE GAMES |
East Japan vs. MAGIC SOFTWARE ENTR | East Japan vs. MCEWEN MINING INC | East Japan vs. Perseus Mining Limited | East Japan vs. CPU SOFTWAREHOUSE |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
Commodity Directory Find actively traded commodities issued by global exchanges | |
CEOs Directory Screen CEOs from public companies around the world | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |