Correlation Between Lion One and Cogeco Communications

Can any of the company-specific risk be diversified away by investing in both Lion One and Cogeco Communications 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 Cogeco Communications 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 Cogeco Communications, you can compare the effects of market volatilities on Lion One and Cogeco Communications 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 Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Cogeco Communications.

Diversification Opportunities for Lion One and Cogeco Communications

0.51

Correlation Coefficient

Lion One  Cogeco Communications

Very weak diversification

The 3 months correlation between Lion and Cogeco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications 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 Cogeco Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Communications has no effect on the direction of Lion One i.e., Lion One and Cogeco Communications go up and down completely randomly.

Pair Corralation between Lion One and Cogeco Communications

Assuming the 90 days horizon Lion One is expected to generate 3.14 times less return on investment than Cogeco Communications. In addition to that, Lion One is 2.68 times more volatile than Cogeco Communications. It trades about 0.02 of its total potential returns per unit of risk. Cogeco Communications is currently generating about 0.13 per unit of volatility. If you would invest  6,395  in Cogeco Communications on September 4, 2024 and sell it today you would earn a total of  635.00  from holding Cogeco Communications or generate 9.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Lion One Metals  vs.  Cogeco Communications

Lion One Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lion One Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Lion One is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cogeco Communications

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cogeco Communications are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cogeco Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lion One and Cogeco Communications

The main advantage of trading using opposite Lion One and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Cogeco Communications 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 Cogeco Communications will offset losses from the drop in Cogeco Communications' long position.

The idea behind Lion One Metals and Cogeco Communications 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.