Correlation Between Lion Biotechnologies and Retail Estates
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and Retail Estates 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 Lion Biotechnologies and Retail Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and Retail Estates NV, you can compare the effects of market volatilities on Lion Biotechnologies and Retail Estates 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 Lion Biotechnologies with a short position of Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and Retail Estates.
Diversification Opportunities for Lion Biotechnologies and Retail Estates
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and Retail is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV and Lion Biotechnologies 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 Lion Biotechnologies are associated (or correlated) with Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and Retail Estates go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and Retail Estates
Assuming the 90 days trading horizon Lion Biotechnologies is expected to under-perform the Retail Estates. In addition to that, Lion Biotechnologies is 4.86 times more volatile than Retail Estates NV. It trades about -0.08 of its total potential returns per unit of risk. Retail Estates NV is currently generating about -0.26 per unit of volatility. If you would invest 6,270 in Retail Estates NV on August 31, 2024 and sell it today you would lose (380.00) from holding Retail Estates NV or give up 6.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Biotechnologies vs. Retail Estates NV
Performance |
| Timeline |
| Lion Biotechnologies |
| Retail Estates NV |
Lion Biotechnologies and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Biotechnologies and Retail Estates
The main advantage of trading using opposite Lion Biotechnologies and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
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Check out your portfolio center.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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