Correlation Between LION ONE and GameStop Corp

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

Diversification Opportunities for LION ONE and GameStop Corp

-0.33

Correlation Coefficient

LION ONE  GameStop Corp

Very good diversification

The 3 months correlation between LION and GameStop is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp 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 GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of LION ONE i.e., LION ONE and GameStop Corp go up and down completely randomly.

Pair Corralation between LION ONE and GameStop Corp

Assuming the 90 days trading horizon LION ONE is expected to generate 8.26 times less return on investment than GameStop Corp. But when comparing it to its historical volatility, LION ONE METALS is 1.16 times less risky than GameStop Corp. It trades about 0.02 of its potential returns per unit of risk. GameStop Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,180  in GameStop Corp on August 31, 2024 and sell it today you would earn a total of  726.00  from holding GameStop Corp or generate 33.3% return on investment over 90 days.

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

LION ONE METALS  vs.  GameStop Corp

LION ONE METALS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LION ONE METALS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

GameStop Corp

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GameStop Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LION ONE and GameStop Corp

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

The idea behind LION ONE METALS and GameStop Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.