Correlation Between Lion Biotechnologies and Repsol
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and Repsol 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 Repsol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and Repsol, you can compare the effects of market volatilities on Lion Biotechnologies and Repsol 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 Repsol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and Repsol.
Diversification Opportunities for Lion Biotechnologies and Repsol
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lion and Repsol is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and Repsol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol 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 Repsol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and Repsol go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and Repsol
Assuming the 90 days trading horizon Lion Biotechnologies is expected to under-perform the Repsol. In addition to that, Lion Biotechnologies is 4.37 times more volatile than Repsol. It trades about -0.2 of its total potential returns per unit of risk. Repsol is currently generating about -0.07 per unit of volatility. If you would invest 1,155 in Repsol on September 12, 2024 and sell it today you would lose (19.00) from holding Repsol or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Biotechnologies vs. Repsol
Performance |
| Timeline |
| Lion Biotechnologies |
| Repsol |
Lion Biotechnologies and Repsol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Biotechnologies and Repsol
The main advantage of trading using opposite Lion Biotechnologies and Repsol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, Repsol 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 Repsol will offset losses from the drop in Repsol's long position.| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
| Repsol vs. REVO INSURANCE SPA | Repsol vs. RCM TECHNOLOGIES | Repsol vs. Lion Biotechnologies | Repsol vs. Chiba Bank |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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