Correlation Between LION ONE and Varta AG
Can any of the company-specific risk be diversified away by investing in both LION ONE and Varta AG 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 Varta AG 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 Varta AG, you can compare the effects of market volatilities on LION ONE and Varta AG 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 Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Varta AG.
Diversification Opportunities for LION ONE and Varta AG
Excellent diversification
The 3 months correlation between LION and Varta is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG 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 Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of LION ONE i.e., LION ONE and Varta AG go up and down completely randomly.
Pair Corralation between LION ONE and Varta AG
Assuming the 90 days trading horizon LION ONE is expected to generate 14.07 times less return on investment than Varta AG. But when comparing it to its historical volatility, LION ONE METALS is 2.68 times less risky than Varta AG. It trades about 0.01 of its potential returns per unit of risk. Varta AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 169.00 in Varta AG on December 4, 2024 and sell it today you would lose (21.00) from holding Varta AG or give up 12.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
LION ONE METALS vs. Varta AG
Performance |
| Timeline |
| LION ONE METALS |
| Varta AG |
LION ONE and Varta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Varta AG
The main advantage of trading using opposite LION ONE and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, Varta AG 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 Varta AG will offset losses from the drop in Varta AG's long position.| LION ONE vs. Datang International Power | LION ONE vs. Fast Retailing Co | LION ONE vs. Alliance Data Systems | LION ONE vs. Linedata Services SA |
| Varta AG vs. Semiconductor Manufacturing International | Varta AG vs. United Natural Foods | Varta AG vs. Cal Maine Foods | Varta AG vs. PATTIES FOODS |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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