Correlation Between Lion One and Goldshore Resources

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

Diversification Opportunities for Lion One and Goldshore Resources

0.8

Correlation Coefficient

Lion One  Goldshore Resources

Very poor diversification

The 3 months correlation between Lion and Goldshore is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Goldshore Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldshore 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 Goldshore Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldshore Resources has no effect on the direction of Lion One i.e., Lion One and Goldshore Resources go up and down completely randomly.

Pair Corralation between Lion One and Goldshore Resources

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Goldshore Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 1.83 times less risky than Goldshore Resources. The otc stock trades about -0.07 of its potential returns per unit of risk. The Goldshore Resources is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Goldshore Resources on September 12, 2024 and sell it today you would lose (2.00) from holding Goldshore Resources or give up 9.52% of portfolio value over 90 days.

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

Lion One Metals  vs.  Goldshore 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 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.

Goldshore Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldshore Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Goldshore 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 Goldshore Resources

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

The idea behind Lion One Metals and Goldshore 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.