Correlation Between East Africa and Lion One
Can any of the company-specific risk be diversified away by investing in both East Africa 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 East Africa and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and Lion One Metals, you can compare the effects of market volatilities on East Africa 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 East Africa with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and Lion One.
Diversification Opportunities for East Africa and Lion One
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between East and Lion is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals 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 East Africa 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 East Africa Metals 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 East Africa i.e., East Africa and Lion One go up and down completely randomly.
Pair Corralation between East Africa and Lion One
Assuming the 90 days horizon East Africa Metals is expected to generate 12.21 times more return on investment than Lion One. However, East Africa is 12.21 times more volatile than Lion One Metals. It trades about 0.09 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.05 per unit of risk. If you would invest 1.10 in East Africa Metals on August 28, 2024 and sell it today you would earn a total of 9.90 from holding East Africa Metals or generate 900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
East Africa Metals vs. Lion One Metals
Performance |
| Timeline |
| East Africa Metals |
| Lion One Metals |
East Africa and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Africa and Lion One
The main advantage of trading using opposite East Africa and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa 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.| East Africa vs. Ascendant Resources | East Africa vs. Cantex Mine Development | East Africa vs. Amarc Resources | East Africa vs. Sterling Metals Corp |
| Lion One vs. Irving Resources | Lion One vs. Headwater Gold | Lion One vs. Novo Resources Corp | Lion One vs. Snowline Gold Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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