Correlation Between Montero Mining and Lion One

Can any of the company-specific risk be diversified away by investing in both Montero Mining and Lion One 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 Montero Mining and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Montero Mining and and Lion One Metals, you can compare the effects of market volatilities on Montero Mining and Lion One 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 Montero Mining with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montero Mining and Lion One.

Diversification Opportunities for Montero Mining and Lion One

-0.53

Correlation Coefficient

Montero Mining  Lion One

Excellent diversification

The 3 months correlation between Montero and Lion is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Montero Mining and and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and Montero Mining 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 Montero Mining and are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Montero Mining i.e., Montero Mining and Lion One go up and down completely randomly.

Pair Corralation between Montero Mining and Lion One

Assuming the 90 days horizon Montero Mining and is expected to generate 1.02 times more return on investment than Lion One. However, Montero Mining is 1.02 times more volatile than Lion One Metals. It trades about -0.01 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.06 per unit of risk. If you would invest  33.00  in Montero Mining and on September 13, 2024 and sell it today you would lose (2.00) from holding Montero Mining and or give up 6.06% of portfolio value over 90 days.

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

Montero Mining and  vs.  Lion One Metals

Montero Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montero Mining and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Montero Mining is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Montero Mining and Lion One

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

The idea behind Montero Mining and and Lion One Metals 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.