Correlation Between Lion One and American Hotel
Can any of the company-specific risk be diversified away by investing in both Lion One and American Hotel 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 One and American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion One Metals and American Hotel Income, you can compare the effects of market volatilities on Lion One and American Hotel 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 One with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and American Hotel.
Diversification Opportunities for Lion One and American Hotel
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and American is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income and Lion One 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 One Metals are associated (or correlated) with American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Lion One i.e., Lion One and American Hotel go up and down completely randomly.
Pair Corralation between Lion One and American Hotel
Assuming the 90 days horizon Lion One Metals is expected to under-perform the American Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 1.32 times less risky than American Hotel. The stock trades about -0.04 of its potential returns per unit of risk. The American Hotel Income is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 164.00 in American Hotel Income on November 27, 2024 and sell it today you would lose (101.00) from holding American Hotel Income or give up 61.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 84.11% |
| Values | Daily Returns |
Lion One Metals vs. American Hotel Income
Performance |
| Timeline |
| Lion One Metals |
| American Hotel Income |
Lion One and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and American Hotel
The main advantage of trading using opposite Lion One and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel's long position.The idea behind Lion One Metals and American Hotel Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| American Hotel vs. Applied Materials, | American Hotel vs. Nova Leap Health | American Hotel vs. Bird Construction | American Hotel vs. NeuPath Health |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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