Correlation Between Lion One and Klondike Gold

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

Diversification Opportunities for Lion One and Klondike Gold

0.81

Correlation Coefficient

Lion One  Klondike Gold

Very poor diversification

The 3 months correlation between Lion and Klondike is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Klondike Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klondike Gold Corp 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 Klondike Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klondike Gold Corp has no effect on the direction of Lion One i.e., Lion One and Klondike Gold go up and down completely randomly.

Pair Corralation between Lion One and Klondike Gold

Assuming the 90 days horizon Lion One Metals is expected to generate 0.35 times more return on investment than Klondike Gold. However, Lion One Metals is 2.84 times less risky than Klondike Gold. It trades about -0.13 of its potential returns per unit of risk. Klondike Gold Corp is currently generating about -0.05 per unit of risk. If you would invest  24.00  in Lion One Metals on September 23, 2024 and sell it today you would lose (6.00) from holding Lion One Metals or give up 25.0% 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.  Klondike Gold Corp

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 fragile 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.

Klondike Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Klondike Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Lion One and Klondike Gold

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

The idea behind Lion One Metals and Klondike Gold Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.