Correlation Between Red Pine and Lion One
Can any of the company-specific risk be diversified away by investing in both Red Pine and Lion One 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 Red Pine and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Pine Exploration and Lion One Metals, you can compare the effects of market volatilities on Red Pine and Lion One 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 Red Pine with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and Lion One.
Diversification Opportunities for Red Pine and Lion One
Poor diversification
The 3 months correlation between Red and Lion is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and Red Pine 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 Red Pine Exploration are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Red Pine i.e., Red Pine and Lion One go up and down completely randomly.
Pair Corralation between Red Pine and Lion One
Assuming the 90 days horizon Red Pine Exploration is expected to generate 1.17 times more return on investment than Lion One. However, Red Pine is 1.17 times more volatile than Lion One Metals. It trades about -0.15 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.3 per unit of risk. If you would invest 9.60 in Red Pine Exploration on August 30, 2024 and sell it today you would lose (1.18) from holding Red Pine Exploration or give up 12.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Red Pine Exploration vs. Lion One Metals
Performance |
| Timeline |
| Red Pine Exploration |
| Lion One Metals |
Red Pine and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and Lion One
The main advantage of trading using opposite Red Pine and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Red Pine vs. Silver Hammer Mining | Red Pine vs. Reyna Silver Corp | Red Pine vs. Guanajuato Silver | Red Pine vs. Silver One Resources |
| Lion One vs. Silver Hammer Mining | Lion One vs. Reyna Silver Corp | Lion One vs. Guanajuato Silver | Lion One vs. Silver One Resources |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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