Correlation Between Lion One and Cumberland Pharmaceuticals

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

Diversification Opportunities for Lion One and Cumberland Pharmaceuticals

0.1

Correlation Coefficient

Lion One  Cumberland Pharmaceuticals

Average diversification

The 3 months correlation between Lion and Cumberland is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Lion One i.e., Lion One and Cumberland Pharmaceuticals go up and down completely randomly.

Pair Corralation between Lion One and Cumberland Pharmaceuticals

Assuming the 90 days horizon Lion One Metals is expected to generate 0.84 times more return on investment than Cumberland Pharmaceuticals. However, Lion One Metals is 1.19 times less risky than Cumberland Pharmaceuticals. It trades about -0.03 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about -0.04 per unit of risk. If you would invest  21.00  in Lion One Metals on September 5, 2024 and sell it today you would lose (2.00) from holding Lion One Metals or give up 9.52% 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.  Cumberland Pharmaceuticals

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. Despite latest abnormal performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Cumberland Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cumberland Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Cumberland Pharmaceuticals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lion One and Cumberland Pharmaceuticals

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

The idea behind Lion One Metals and Cumberland Pharmaceuticals 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.