Correlation Between Austin Engineering and Lion Electric
Can any of the company-specific risk be diversified away by investing in both Austin Engineering and Lion Electric 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 Austin Engineering and Lion Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austin Engineering Limited and Lion Electric Corp, you can compare the effects of market volatilities on Austin Engineering and Lion Electric 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 Austin Engineering with a short position of Lion Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austin Engineering and Lion Electric.
Diversification Opportunities for Austin Engineering and Lion Electric
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Austin and Lion is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Austin Engineering Limited and Lion Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Electric Corp and Austin Engineering 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 Austin Engineering Limited are associated (or correlated) with Lion Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Electric Corp has no effect on the direction of Austin Engineering i.e., Austin Engineering and Lion Electric go up and down completely randomly.
Pair Corralation between Austin Engineering and Lion Electric
Assuming the 90 days horizon Austin Engineering Limited is expected to generate 0.94 times more return on investment than Lion Electric. However, Austin Engineering Limited is 1.06 times less risky than Lion Electric. It trades about 0.05 of its potential returns per unit of risk. Lion Electric Corp is currently generating about -0.15 per unit of risk. If you would invest 24.00 in Austin Engineering Limited on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Austin Engineering Limited or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Austin Engineering Limited vs. Lion Electric Corp
Performance |
| Timeline |
| Austin Engineering |
| Lion Electric Corp |
Austin Engineering and Lion Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austin Engineering and Lion Electric
The main advantage of trading using opposite Austin Engineering and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austin Engineering position performs unexpectedly, Lion Electric 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 Electric will offset losses from the drop in Lion Electric's long position.| Austin Engineering vs. American Premium Water | Austin Engineering vs. AmeraMex International | Austin Engineering vs. Arts Way Manufacturing Co | Austin Engineering vs. Astec Industries |
| Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water | Lion Electric vs. Titan International |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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