Correlation Between Lion One and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Lion One and China BlueChemical 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 China BlueChemical 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 China BlueChemical, you can compare the effects of market volatilities on Lion One and China BlueChemical 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 China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and China BlueChemical.
Diversification Opportunities for Lion One and China BlueChemical
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and China is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Lion One i.e., Lion One and China BlueChemical go up and down completely randomly.
Pair Corralation between Lion One and China BlueChemical
Assuming the 90 days horizon Lion One Metals is expected to under-perform the China BlueChemical. In addition to that, Lion One is 1.18 times more volatile than China BlueChemical. It trades about -0.03 of its total potential returns per unit of risk. China BlueChemical is currently generating about 0.03 per unit of volatility. If you would invest 21.00 in China BlueChemical on September 3, 2024 and sell it today you would earn a total of 3.00 from holding China BlueChemical or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. China BlueChemical
Performance |
| Timeline |
| Lion One Metals |
| China BlueChemical |
Lion One and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and China BlueChemical
The main advantage of trading using opposite Lion One and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, China BlueChemical 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 China BlueChemical will offset losses from the drop in China BlueChemical's long position.| Lion One vs. Cars Inc | Lion One vs. Chunghwa Telecom Co | Lion One vs. United Internet AG | Lion One vs. JAPAN TOBACCO UNSPADR12 |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |