Correlation Between Uranium Energy and Lion One

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

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

Diversification Opportunities for Uranium Energy and Lion One

-0.37

Correlation Coefficient

Uranium Energy  Lion One

Very good diversification

The 3 months correlation between Uranium and Lion is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Uranium Energy Corp 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 Uranium Energy 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 Uranium Energy Corp 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 Uranium Energy i.e., Uranium Energy and Lion One go up and down completely randomly.

Pair Corralation between Uranium Energy and Lion One

Considering the 90-day investment horizon Uranium Energy Corp is expected to under-perform the Lion One. But the stock apears to be less risky and, when comparing its historical volatility, Uranium Energy Corp is 1.18 times less risky than Lion One. The stock trades about -0.25 of its potential returns per unit of risk. The Lion One Metals is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Lion One Metals on September 23, 2024 and sell it today you would lose (3.00) from holding Lion One Metals or give up 14.29% of portfolio value over 90 days.

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

Uranium Energy Corp  vs.  Lion One Metals

Uranium Energy Corp

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uranium Energy Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Uranium Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

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. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Uranium Energy and Lion One

The main advantage of trading using opposite Uranium Energy and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uranium Energy 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 Uranium Energy Corp 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.