Correlation Between Lion Financial and Glory Star
Can any of the company-specific risk be diversified away by investing in both Lion Financial and Glory Star 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 Financial and Glory Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Financial Group and Glory Star New, you can compare the effects of market volatilities on Lion Financial and Glory Star 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 Financial with a short position of Glory Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Financial and Glory Star.
Diversification Opportunities for Lion Financial and Glory Star
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lion and Glory is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group and Glory Star New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glory Star New and Lion Financial 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 Financial Group are associated (or correlated) with Glory Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glory Star New has no effect on the direction of Lion Financial i.e., Lion Financial and Glory Star go up and down completely randomly.
Pair Corralation between Lion Financial and Glory Star
Assuming the 90 days horizon Lion Financial Group is expected to under-perform the Glory Star. But the stock apears to be less risky and, when comparing its historical volatility, Lion Financial Group is 3.67 times less risky than Glory Star. The stock trades about -0.06 of its potential returns per unit of risk. The Glory Star New is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.10 in Glory Star New on November 3, 2024 and sell it today you would lose (0.04) from holding Glory Star New or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Lion Financial Group vs. Glory Star New
Performance |
| Timeline |
| Lion Financial Group |
| Glory Star New |
Lion Financial and Glory Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Financial and Glory Star
The main advantage of trading using opposite Lion Financial and Glory Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Financial position performs unexpectedly, Glory Star 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 Glory Star will offset losses from the drop in Glory Star's long position.| Lion Financial vs. Glory Star New | Lion Financial vs. Lion Group Holding | Lion Financial vs. Hall of Fame |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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