Correlation Between LODESTAR MIN and Lion Biotechnologies
Can any of the company-specific risk be diversified away by investing in both LODESTAR MIN and Lion Biotechnologies 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 LODESTAR MIN and Lion Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LODESTAR MIN and Lion Biotechnologies, you can compare the effects of market volatilities on LODESTAR MIN and Lion Biotechnologies 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 LODESTAR MIN with a short position of Lion Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LODESTAR MIN and Lion Biotechnologies.
Diversification Opportunities for LODESTAR MIN and Lion Biotechnologies
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LODESTAR and Lion is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding LODESTAR MIN and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies and LODESTAR MIN 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 LODESTAR MIN are associated (or correlated) with Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of LODESTAR MIN i.e., LODESTAR MIN and Lion Biotechnologies go up and down completely randomly.
Pair Corralation between LODESTAR MIN and Lion Biotechnologies
Assuming the 90 days trading horizon LODESTAR MIN is expected to generate 48.49 times more return on investment than Lion Biotechnologies. However, LODESTAR MIN is 48.49 times more volatile than Lion Biotechnologies. It trades about 0.21 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about -0.2 per unit of risk. If you would invest 0.44 in LODESTAR MIN on September 12, 2024 and sell it today you would earn a total of 8.33 from holding LODESTAR MIN or generate 1893.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LODESTAR MIN vs. Lion Biotechnologies
Performance |
| Timeline |
| LODESTAR MIN |
| Lion Biotechnologies |
LODESTAR MIN and Lion Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LODESTAR MIN and Lion Biotechnologies
The main advantage of trading using opposite LODESTAR MIN and Lion Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LODESTAR MIN position performs unexpectedly, Lion Biotechnologies 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 Biotechnologies will offset losses from the drop in Lion Biotechnologies' long position.| LODESTAR MIN vs. Apple Inc | LODESTAR MIN vs. Apple Inc | LODESTAR MIN vs. Apple Inc | LODESTAR MIN vs. Apple Inc |
| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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