Correlation Between TOTAL GABON and LION ONE

Can any of the company-specific risk be diversified away by investing in both TOTAL GABON 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 TOTAL GABON and LION ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TOTAL GABON and LION ONE METALS, you can compare the effects of market volatilities on TOTAL GABON 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 TOTAL GABON with a short position of LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and LION ONE.

Diversification Opportunities for TOTAL GABON and LION ONE

0.3

Correlation Coefficient

TOTAL GABON  LION ONE

Weak diversification

The 3 months correlation between TOTAL and LION is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON 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 TOTAL GABON 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 TOTAL GABON 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 TOTAL GABON i.e., TOTAL GABON and LION ONE go up and down completely randomly.

Pair Corralation between TOTAL GABON and LION ONE

Assuming the 90 days trading horizon TOTAL GABON is expected to generate 0.83 times more return on investment than LION ONE. However, TOTAL GABON is 1.21 times less risky than LION ONE. It trades about 0.14 of its potential returns per unit of risk. LION ONE METALS is currently generating about 0.1 per unit of risk. If you would invest  11,748  in TOTAL GABON on December 26, 2024 and sell it today you would earn a total of  5,702  from holding TOTAL GABON or generate 48.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

TOTAL GABON  vs.  LION ONE METALS

TOTAL GABON

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL GABON are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TOTAL GABON exhibited solid returns over the last few months and may actually be approaching a breakup point.

LION ONE METALS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LION ONE METALS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, LION ONE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TOTAL GABON and LION ONE

The main advantage of trading using opposite TOTAL GABON and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON 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 TOTAL GABON 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.