Correlation Between Leading Edge and Lion One
Can any of the company-specific risk be diversified away by investing in both Leading Edge 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 Leading Edge and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leading Edge Materials and Lion One Metals, you can compare the effects of market volatilities on Leading Edge 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 Leading Edge with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Lion One.
Diversification Opportunities for Leading Edge and Lion One
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Leading and Lion is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials 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 Leading Edge 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 Leading Edge Materials 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 Leading Edge i.e., Leading Edge and Lion One go up and down completely randomly.
Pair Corralation between Leading Edge and Lion One
Assuming the 90 days horizon Leading Edge Materials is expected to under-perform the Lion One. But the stock apears to be less risky and, when comparing its historical volatility, Leading Edge Materials is 1.25 times less risky than Lion One. The stock trades about -0.03 of its potential returns per unit of risk. The Lion One Metals is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Lion One Metals on November 3, 2024 and sell it today you would earn a total of 10.00 from holding Lion One Metals or generate 35.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Leading Edge Materials vs. Lion One Metals
Performance |
| Timeline |
| Leading Edge Materials |
| Lion One Metals |
Leading Edge and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and Lion One
The main advantage of trading using opposite Leading Edge and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge 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.| Leading Edge vs. Hannan Metals | Leading Edge vs. Mkango Resources | Leading Edge vs. Elcora Advanced Materials | Leading Edge vs. Midnight Sun Mining |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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