Correlation Between LION ONE and Insulet

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

Diversification Opportunities for LION ONE and Insulet

-0.72

Correlation Coefficient

LION ONE  Insulet

Pay attention - limited upside

The 3 months correlation between LION and Insulet is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet 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 Insulet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet has no effect on the direction of LION ONE i.e., LION ONE and Insulet go up and down completely randomly.

Pair Corralation between LION ONE and Insulet

Assuming the 90 days trading horizon LION ONE METALS is expected to generate 5.24 times more return on investment than Insulet. However, LION ONE is 5.24 times more volatile than Insulet. It trades about 0.18 of its potential returns per unit of risk. Insulet is currently generating about 0.05 per unit of risk. If you would invest  16.00  in LION ONE METALS on October 13, 2024 and sell it today you would earn a total of  4.00  from holding LION ONE METALS or generate 25.0% 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.  Insulet

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Insulet

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Insulet are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Insulet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LION ONE and Insulet

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

The idea behind LION ONE METALS and Insulet 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.