Correlation Between Lion One and Slam Exploration

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

Diversification Opportunities for Lion One and Slam Exploration

0.14

Correlation Coefficient

Lion One  Slam Exploration

Average diversification

The 3 months correlation between Lion and Slam is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Slam Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slam Exploration 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 Slam Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slam Exploration has no effect on the direction of Lion One i.e., Lion One and Slam Exploration go up and down completely randomly.

Pair Corralation between Lion One and Slam Exploration

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Slam Exploration. But the stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 3.6 times less risky than Slam Exploration. The stock trades about -0.11 of its potential returns per unit of risk. The Slam Exploration is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Slam Exploration on October 1, 2024 and sell it today you would lose (1.00) from holding Slam Exploration or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lion One Metals  vs.  Slam Exploration

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Slam Exploration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Slam Exploration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Slam Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion One and Slam Exploration

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

The idea behind Lion One Metals and Slam Exploration 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.