Correlation Between Lion One and WESTLAKE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Lion One and WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL, you can compare the effects of market volatilities on Lion One and WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and WESTLAKE CHEMICAL.
Diversification Opportunities for Lion One and WESTLAKE CHEMICAL
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and WESTLAKE is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and WESTLAKE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTLAKE CHEMICAL has no effect on the direction of Lion One i.e., Lion One and WESTLAKE CHEMICAL go up and down completely randomly.
Pair Corralation between Lion One and WESTLAKE CHEMICAL
Assuming the 90 days horizon Lion One Metals is expected to under-perform the WESTLAKE CHEMICAL. In addition to that, Lion One is 2.76 times more volatile than WESTLAKE CHEMICAL. It trades about -0.06 of its total potential returns per unit of risk. WESTLAKE CHEMICAL is currently generating about -0.07 per unit of volatility. If you would invest 14,581 in WESTLAKE CHEMICAL on September 1, 2024 and sell it today you would lose (2,381) from holding WESTLAKE CHEMICAL or give up 16.33% 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. WESTLAKE CHEMICAL
Performance |
| Timeline |
| Lion One Metals |
| WESTLAKE CHEMICAL |
Lion One and WESTLAKE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and WESTLAKE CHEMICAL
The main advantage of trading using opposite Lion One and WESTLAKE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL will offset losses from the drop in WESTLAKE CHEMICAL's long position.| Lion One vs. NIPPON STEEL SPADR | Lion One vs. United States Steel | Lion One vs. Nippon Steel | Lion One vs. Singapore Telecommunications Limited |
| WESTLAKE CHEMICAL vs. NTG Nordic Transport | WESTLAKE CHEMICAL vs. ALGOMA STEEL GROUP | WESTLAKE CHEMICAL vs. TITANIUM TRANSPORTGROUP | WESTLAKE CHEMICAL vs. RELIANCE STEEL AL |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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