Correlation Between Lion One and Nine Dragons
Can any of the company-specific risk be diversified away by investing in both Lion One and Nine Dragons 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 Nine Dragons 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 Nine Dragons Paper, you can compare the effects of market volatilities on Lion One and Nine Dragons 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 Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Nine Dragons.
Diversification Opportunities for Lion One and Nine Dragons
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and Nine is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Nine Dragons Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Dragons Paper 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 Nine Dragons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Dragons Paper has no effect on the direction of Lion One i.e., Lion One and Nine Dragons go up and down completely randomly.
Pair Corralation between Lion One and Nine Dragons
Assuming the 90 days horizon Lion One Metals is expected to under-perform the Nine Dragons. In addition to that, Lion One is 1.47 times more volatile than Nine Dragons Paper. It trades about -0.17 of its total potential returns per unit of risk. Nine Dragons Paper is currently generating about -0.13 per unit of volatility. If you would invest 40.00 in Nine Dragons Paper on August 29, 2024 and sell it today you would lose (3.00) from holding Nine Dragons Paper or give up 7.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. Nine Dragons Paper
Performance |
| Timeline |
| Lion One Metals |
| Nine Dragons Paper |
Lion One and Nine Dragons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and Nine Dragons
The main advantage of trading using opposite Lion One and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Nine Dragons 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 Nine Dragons will offset losses from the drop in Nine Dragons' long position.| Lion One vs. Franco Nevada | Lion One vs. Agnico Eagle Mines | Lion One vs. Superior Plus Corp | Lion One vs. NMI Holdings |
| Nine Dragons vs. Lion One Metals | Nine Dragons vs. MCEWEN MINING INC | Nine Dragons vs. YATRA ONLINE DL 0001 | Nine Dragons vs. Sixt Leasing SE |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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