Correlation Between LION ONE and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both LION ONE and FARO Technologies 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 FARO Technologies 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 FARO Technologies, you can compare the effects of market volatilities on LION ONE and FARO Technologies 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 FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and FARO Technologies.
Diversification Opportunities for LION ONE and FARO Technologies
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LION and FARO is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies 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 FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of LION ONE i.e., LION ONE and FARO Technologies go up and down completely randomly.
Pair Corralation between LION ONE and FARO Technologies
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the FARO Technologies. But the stock apears to be less risky and, when comparing its historical volatility, LION ONE METALS is 2.13 times less risky than FARO Technologies. The stock trades about -0.15 of its potential returns per unit of risk. The FARO Technologies is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,710 in FARO Technologies on August 29, 2024 and sell it today you would earn a total of 870.00 from holding FARO Technologies or generate 50.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LION ONE METALS vs. FARO Technologies
Performance |
| Timeline |
| LION ONE METALS |
| FARO Technologies |
LION ONE and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and FARO Technologies
The main advantage of trading using opposite LION ONE and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.| LION ONE vs. Apple Inc | LION ONE vs. Apple Inc | LION ONE vs. Superior Plus Corp | LION ONE vs. SIVERS SEMICONDUCTORS AB |
| FARO Technologies vs. LION ONE METALS | FARO Technologies vs. Chongqing Machinery Electric | FARO Technologies vs. Sumitomo Mitsui Construction | FARO Technologies vs. Perseus Mining Limited |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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