Correlation Between Lion One and MULTI CHEM
Can any of the company-specific risk be diversified away by investing in both Lion One and MULTI CHEM 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 MULTI CHEM 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 MULTI CHEM LTD, you can compare the effects of market volatilities on Lion One and MULTI CHEM 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 MULTI CHEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and MULTI CHEM.
Diversification Opportunities for Lion One and MULTI CHEM
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and MULTI is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and MULTI CHEM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MULTI CHEM LTD 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 MULTI CHEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MULTI CHEM LTD has no effect on the direction of Lion One i.e., Lion One and MULTI CHEM go up and down completely randomly.
Pair Corralation between Lion One and MULTI CHEM
Assuming the 90 days horizon Lion One Metals is expected to under-perform the MULTI CHEM. In addition to that, Lion One is 1.23 times more volatile than MULTI CHEM LTD. It trades about -0.05 of its total potential returns per unit of risk. MULTI CHEM LTD is currently generating about 0.06 per unit of volatility. If you would invest 184.00 in MULTI CHEM LTD on September 3, 2024 and sell it today you would earn a total of 6.00 from holding MULTI CHEM LTD or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. MULTI CHEM LTD
Performance |
| Timeline |
| Lion One Metals |
| MULTI CHEM LTD |
Lion One and MULTI CHEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and MULTI CHEM
The main advantage of trading using opposite Lion One and MULTI CHEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, MULTI CHEM 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 MULTI CHEM will offset losses from the drop in MULTI CHEM'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 |
| MULTI CHEM vs. Goosehead Insurance | MULTI CHEM vs. Lion One Metals | MULTI CHEM vs. LIFENET INSURANCE CO | MULTI CHEM vs. GALENA MINING LTD |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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