Correlation Between Lion One and Eloro Resources

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

Diversification Opportunities for Lion One and Eloro Resources

0.43

Correlation Coefficient

Lion One  Eloro Resources

Very weak diversification

The 3 months correlation between Lion and Eloro is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Eloro Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eloro Resources 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 Eloro Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eloro Resources has no effect on the direction of Lion One i.e., Lion One and Eloro Resources go up and down completely randomly.

Pair Corralation between Lion One and Eloro Resources

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Eloro Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 1.9 times less risky than Eloro Resources. The otc stock trades about -0.09 of its potential returns per unit of risk. The Eloro Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Eloro Resources on September 13, 2024 and sell it today you would lose (5.00) from holding Eloro Resources or give up 6.58% of portfolio value over 90 days.

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

Lion One Metals  vs.  Eloro Resources

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 abnormal performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eloro Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eloro Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eloro Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lion One and Eloro Resources

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

The idea behind Lion One Metals and Eloro Resources 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.