Correlation Between Lion One and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both Lion One and Sanyo 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 Sanyo 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 Sanyo Chemical Industries, you can compare the effects of market volatilities on Lion One and Sanyo 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Sanyo Chemical.
Diversification Opportunities for Lion One and Sanyo Chemical
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lion and Sanyo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of Lion One i.e., Lion One and Sanyo Chemical go up and down completely randomly.
Pair Corralation between Lion One and Sanyo Chemical
Assuming the 90 days horizon Lion One Metals is expected to under-perform the Sanyo Chemical. In addition to that, Lion One is 3.79 times more volatile than Sanyo Chemical Industries. It trades about -0.04 of its total potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.01 per unit of volatility. If you would invest 2,520 in Sanyo Chemical Industries on September 1, 2024 and sell it today you would lose (120.00) from holding Sanyo Chemical Industries or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. Sanyo Chemical Industries
Performance |
| Timeline |
| Lion One Metals |
| Sanyo Chemical Industries |
Lion One and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and Sanyo Chemical
The main advantage of trading using opposite Lion One and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Sanyo 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 Sanyo Chemical will offset losses from the drop in Sanyo 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 |
| Sanyo Chemical vs. The Sherwin Williams | Sanyo Chemical vs. SIKA AG UNSPADR | Sanyo Chemical vs. LyondellBasell Industries NV | Sanyo Chemical vs. Albemarle |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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