Correlation Between LION ONE and CDL INVESTMENT

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

Diversification Opportunities for LION ONE and CDL INVESTMENT

-0.36

Correlation Coefficient

LION ONE  CDL INVESTMENT

Very good diversification

The 3 months correlation between LION and CDL is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT 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 CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of LION ONE i.e., LION ONE and CDL INVESTMENT go up and down completely randomly.

Pair Corralation between LION ONE and CDL INVESTMENT

Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the CDL INVESTMENT. In addition to that, LION ONE is 1.86 times more volatile than CDL INVESTMENT. It trades about -0.05 of its total potential returns per unit of risk. CDL INVESTMENT is currently generating about -0.01 per unit of volatility. If you would invest  44.00  in CDL INVESTMENT on September 14, 2024 and sell it today you would lose (1.00) from holding CDL INVESTMENT or give up 2.27% of portfolio value over 90 days.

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

LION ONE METALS  vs.  CDL INVESTMENT

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. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CDL INVESTMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CDL INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CDL INVESTMENT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LION ONE and CDL INVESTMENT

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

The idea behind LION ONE METALS and CDL INVESTMENT 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.