Correlation Between LION ONE and Strategic Investments
Can any of the company-specific risk be diversified away by investing in both LION ONE and Strategic Investments 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 Strategic Investments 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 Strategic Investments AS, you can compare the effects of market volatilities on LION ONE and Strategic Investments 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 Strategic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Strategic Investments.
Diversification Opportunities for LION ONE and Strategic Investments
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between LION and Strategic is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments 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 Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of LION ONE i.e., LION ONE and Strategic Investments go up and down completely randomly.
Pair Corralation between LION ONE and Strategic Investments
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Strategic Investments. But the stock apears to be less risky and, when comparing its historical volatility, LION ONE METALS is 1.33 times less risky than Strategic Investments. The stock trades about -0.03 of its potential returns per unit of risk. The Strategic Investments AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8.80 in Strategic Investments AS on September 3, 2024 and sell it today you would earn a total of 5.20 from holding Strategic Investments AS or generate 59.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. Strategic Investments AS
Performance |
| Timeline |
| LION ONE METALS |
| Strategic Investments |
LION ONE and Strategic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Strategic Investments
The main advantage of trading using opposite LION ONE and Strategic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, Strategic Investments 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 Strategic Investments will offset losses from the drop in Strategic Investments' long position.| LION ONE vs. HomeToGo SE | LION ONE vs. NORTHEAST UTILITIES | LION ONE vs. SBM OFFSHORE | LION ONE vs. Zijin Mining Group |
| Strategic Investments vs. Japan Tobacco | Strategic Investments vs. MAROC TELECOM | Strategic Investments vs. REGAL HOTEL INTL | Strategic Investments vs. Host Hotels Resorts |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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