Correlation Between Transition Metals and Lion One

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

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

Diversification Opportunities for Transition Metals and Lion One

0.75

Correlation Coefficient

Transition Metals  Lion One

Poor diversification

The 3 months correlation between Transition and Lion is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Transition Metals 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 Transition Metals 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 Transition Metals 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 Transition Metals i.e., Transition Metals and Lion One go up and down completely randomly.

Pair Corralation between Transition Metals and Lion One

Assuming the 90 days horizon Transition Metals Corp is expected to under-perform the Lion One. In addition to that, Transition Metals is 1.35 times more volatile than Lion One Metals. It trades about -0.09 of its total potential returns per unit of risk. Lion One Metals is currently generating about 0.13 per unit of volatility. If you would invest  25.00  in Lion One Metals on October 5, 2024 and sell it today you would earn a total of  3.00  from holding Lion One Metals or generate 12.0% return on investment over 90 days.

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

Transition Metals Corp  vs.  Lion One Metals

Transition Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transition Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture 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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Transition Metals and Lion One

The main advantage of trading using opposite Transition Metals and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transition Metals 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 Transition Metals 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.