Correlation Between Robex Resources and Lion One

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

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

Diversification Opportunities for Robex Resources and Lion One

-0.17

Correlation Coefficient

Robex Resources  Lion One

Good diversification

The 3 months correlation between Robex and Lion is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Robex Resources 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 Robex Resources 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 Robex Resources 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 Robex Resources i.e., Robex Resources and Lion One go up and down completely randomly.

Pair Corralation between Robex Resources and Lion One

Assuming the 90 days horizon Robex Resources is expected to generate 0.56 times more return on investment than Lion One. However, Robex Resources is 1.79 times less risky than Lion One. It trades about 0.11 of its potential returns per unit of risk. Lion One Metals is currently generating about 0.0 per unit of risk. If you would invest  156.00  in Robex Resources on December 1, 2024 and sell it today you would earn a total of  31.00  from holding Robex Resources or generate 19.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Robex Resources  vs.  Lion One Metals

Robex Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Robex Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Robex Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Lion One Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Lion One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Robex Resources and Lion One

The main advantage of trading using opposite Robex Resources and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Robex Resources 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 Robex Resources 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.