Correlation Between LION ONE and Getlink SE

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

Diversification Opportunities for LION ONE and Getlink SE

0.36

Correlation Coefficient

LION ONE  Getlink SE

Weak diversification

The 3 months correlation between LION and Getlink is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Getlink SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getlink SE 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 Getlink SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getlink SE has no effect on the direction of LION ONE i.e., LION ONE and Getlink SE go up and down completely randomly.

Pair Corralation between LION ONE and Getlink SE

Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Getlink SE. In addition to that, LION ONE is 4.54 times more volatile than Getlink SE. It trades about -0.03 of its total potential returns per unit of risk. Getlink SE is currently generating about -0.01 per unit of volatility. If you would invest  1,554  in Getlink SE on October 13, 2024 and sell it today you would lose (39.00) from holding Getlink SE or give up 2.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.32%
Values	Daily Returns

LION ONE METALS  vs.  Getlink SE

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.

Getlink SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind LION ONE METALS and Getlink SE 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.