Correlation Between Lion One and Sapiens International

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

Diversification Opportunities for Lion One and Sapiens International

0.83

Correlation Coefficient

Lion One  Sapiens International

Very poor diversification

The 3 months correlation between Lion and Sapiens is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International 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 Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of Lion One i.e., Lion One and Sapiens International go up and down completely randomly.

Pair Corralation between Lion One and Sapiens International

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Sapiens International. But the otc stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 1.15 times less risky than Sapiens International. The otc stock trades about -0.13 of its potential returns per unit of risk. The Sapiens International is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  3,610  in Sapiens International on September 21, 2024 and sell it today you would lose (834.00) from holding Sapiens International or give up 23.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Lion One Metals  vs.  Sapiens International

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.

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lion One and Sapiens International

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

The idea behind Lion One Metals and Sapiens International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.