Correlation Between Lion One and Eloro Resources

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Can any of the company-specific risk be diversified away by investing in both Lion One and Eloro Resources 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 Eloro Resources 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 Eloro Resources, you can compare the effects of market volatilities on Lion One and Eloro Resources 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 Eloro Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Eloro Resources.

Diversification Opportunities for Lion One and Eloro Resources

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Lion and Eloro is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Eloro Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eloro Resources 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 Eloro Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eloro Resources has no effect on the direction of Lion One i.e., Lion One and Eloro Resources go up and down completely randomly.

Pair Corralation between Lion One and Eloro Resources

Assuming the 90 days horizon Lion One Metals is expected to generate 1.61 times more return on investment than Eloro Resources. However, Lion One is 1.61 times more volatile than Eloro Resources. It trades about 0.3 of its potential returns per unit of risk. Eloro Resources is currently generating about 0.31 per unit of risk. If you would invest  19.00  in Lion One Metals on November 3, 2024 and sell it today you would earn a total of  8.00  from holding Lion One Metals or generate 42.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

Lion One Metals  vs.  Eloro Resources

 Performance 
       Timeline  
Lion One Metals 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Lion One Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Lion One reported solid returns over the last few months and may actually be approaching a breakup point.
Eloro Resources 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Eloro Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Eloro Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Lion One and Eloro Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lion One and Eloro Resources

The main advantage of trading using opposite Lion One and Eloro Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Eloro Resources 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 Eloro Resources will offset losses from the drop in Eloro Resources' long position.
The idea behind Lion One Metals and Eloro Resources 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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