Correlation Between LION ONE and Digilife Technologies
Can any of the company-specific risk be diversified away by investing in both LION ONE and Digilife 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 Digilife 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 Digilife Technologies Limited, you can compare the effects of market volatilities on LION ONE and Digilife 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 Digilife Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Digilife Technologies.
Diversification Opportunities for LION ONE and Digilife Technologies
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LION and Digilife is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife 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 Digilife Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digilife Technologies has no effect on the direction of LION ONE i.e., LION ONE and Digilife Technologies go up and down completely randomly.
Pair Corralation between LION ONE and Digilife Technologies
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Digilife Technologies. But the stock apears to be less risky and, when comparing its historical volatility, LION ONE METALS is 1.12 times less risky than Digilife Technologies. The stock trades about -0.08 of its potential returns per unit of risk. The Digilife Technologies Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 119.00 in Digilife Technologies Limited on September 14, 2024 and sell it today you would lose (43.00) from holding Digilife Technologies Limited or give up 36.13% 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. Digilife Technologies Limited
Performance |
| Timeline |
| LION ONE METALS |
| Digilife Technologies |
LION ONE and Digilife Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Digilife Technologies
The main advantage of trading using opposite LION ONE and Digilife Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, Digilife 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 Digilife Technologies will offset losses from the drop in Digilife Technologies' long position.The idea behind LION ONE METALS and Digilife Technologies Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Digilife Technologies vs. Superior Plus Corp | Digilife Technologies vs. SIVERS SEMICONDUCTORS AB | Digilife Technologies vs. Norsk Hydro ASA | Digilife Technologies vs. Reliance Steel Aluminum |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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