Correlation Between Universal Stainless and Lion One

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

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

Diversification Opportunities for Universal Stainless and Lion One

-0.45

Correlation Coefficient

Universal Stainless  Lion One

Very good diversification

The 3 months correlation between Universal and Lion is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Universal Stainless Alloy 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 Universal Stainless 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 Universal Stainless Alloy 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 Universal Stainless i.e., Universal Stainless and Lion One go up and down completely randomly.

Pair Corralation between Universal Stainless and Lion One

Given the investment horizon of 90 days Universal Stainless Alloy is expected to generate 0.76 times more return on investment than Lion One. However, Universal Stainless Alloy is 1.32 times less risky than Lion One. It trades about 0.12 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.05 per unit of risk. If you would invest  1,974  in Universal Stainless Alloy on October 7, 2024 and sell it today you would earn a total of  2,411  from holding Universal Stainless Alloy or generate 122.14% return on investment over 90 days.

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

Universal Stainless Alloy  vs.  Lion One Metals

Universal Stainless Alloy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Universal Stainless may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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

Pair Trading with Universal Stainless and Lion One

The main advantage of trading using opposite Universal Stainless and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Stainless 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 Universal Stainless Alloy 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.