Correlation Between LION ONE and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both LION ONE and Nippon Steel 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 Nippon Steel 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 Nippon Steel, you can compare the effects of market volatilities on LION ONE and Nippon Steel 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 Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Nippon Steel.
Diversification Opportunities for LION ONE and Nippon Steel
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LION and Nippon is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Nippon Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel 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 Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel has no effect on the direction of LION ONE i.e., LION ONE and Nippon Steel go up and down completely randomly.
Pair Corralation between LION ONE and Nippon Steel
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Nippon Steel. In addition to that, LION ONE is 1.46 times more volatile than Nippon Steel. It trades about -0.06 of its total potential returns per unit of risk. Nippon Steel is currently generating about 0.01 per unit of volatility. If you would invest 1,935 in Nippon Steel on September 3, 2024 and sell it today you would lose (22.00) from holding Nippon Steel or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. Nippon Steel
Performance |
| Timeline |
| LION ONE METALS |
| Nippon Steel |
LION ONE and Nippon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Nippon Steel
The main advantage of trading using opposite LION ONE and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, Nippon Steel 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 Nippon Steel will offset losses from the drop in Nippon Steel's long position.| LION ONE vs. HomeToGo SE | LION ONE vs. NORTHEAST UTILITIES | LION ONE vs. SBM OFFSHORE | LION ONE vs. Zijin Mining Group |
| Nippon Steel vs. The Trade Desk | Nippon Steel vs. GREENX METALS LTD | Nippon Steel vs. Perseus Mining Limited | Nippon Steel vs. LION ONE METALS |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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