Correlation Between Lion One and Stora Enso
Can any of the company-specific risk be diversified away by investing in both Lion One and Stora Enso 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 Stora Enso 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 Stora Enso Oyj, you can compare the effects of market volatilities on Lion One and Stora Enso 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 Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Stora Enso.
Diversification Opportunities for Lion One and Stora Enso
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and Stora is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj 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 Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of Lion One i.e., Lion One and Stora Enso go up and down completely randomly.
Pair Corralation between Lion One and Stora Enso
Assuming the 90 days horizon Lion One Metals is expected to generate 2.63 times more return on investment than Stora Enso. However, Lion One is 2.63 times more volatile than Stora Enso Oyj. It trades about 0.01 of its potential returns per unit of risk. Stora Enso Oyj is currently generating about -0.08 per unit of risk. If you would invest 18.00 in Lion One Metals on September 12, 2024 and sell it today you would lose (1.00) from holding Lion One Metals or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Lion One Metals vs. Stora Enso Oyj
Performance |
| Timeline |
| Lion One Metals |
| Stora Enso Oyj |
Lion One and Stora Enso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and Stora Enso
The main advantage of trading using opposite Lion One and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.| Lion One vs. Franco Nevada | Lion One vs. Superior Plus Corp | Lion One vs. SIVERS SEMICONDUCTORS AB | Lion One vs. Norsk Hydro ASA |
| Stora Enso vs. AUSTEVOLL SEAFOOD | Stora Enso vs. Fevertree Drinks PLC | Stora Enso vs. National Beverage Corp | Stora Enso vs. Suntory Beverage Food |
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 Stocks Directory module to find actively traded stocks across global markets.
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