Correlation Between LION ONE and Align Technology

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

Diversification Opportunities for LION ONE and Align Technology

-0.3

Correlation Coefficient

LION ONE  Align Technology

Very good diversification

The 3 months correlation between LION and Align is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology 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 Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of LION ONE i.e., LION ONE and Align Technology go up and down completely randomly.

Pair Corralation between LION ONE and Align Technology

Assuming the 90 days trading horizon LION ONE is expected to generate 1.96 times less return on investment than Align Technology. In addition to that, LION ONE is 1.82 times more volatile than Align Technology. It trades about 0.02 of its total potential returns per unit of risk. Align Technology is currently generating about 0.06 per unit of volatility. If you would invest  20,470  in Align Technology on September 3, 2024 and sell it today you would earn a total of  1,470  from holding Align Technology or generate 7.18% return on investment over 90 days.

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

LION ONE METALS  vs.  Align Technology

LION ONE METALS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LION ONE METALS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LION ONE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Align Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Align Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Align Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with LION ONE and Align Technology

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

The idea behind LION ONE METALS and Align Technology 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.