Correlation Between LION ONE and EMCOR

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

Diversification Opportunities for LION ONE and EMCOR

-0.34

Correlation Coefficient

LION ONE  EMCOR

Very good diversification

The 3 months correlation between LION and EMCOR is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group 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 EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of LION ONE i.e., LION ONE and EMCOR go up and down completely randomly.

Pair Corralation between LION ONE and EMCOR

Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the EMCOR. In addition to that, LION ONE is 1.6 times more volatile than EMCOR Group. It trades about -0.05 of its total potential returns per unit of risk. EMCOR Group is currently generating about 0.2 per unit of volatility. If you would invest  34,838  in EMCOR Group on September 12, 2024 and sell it today you would earn a total of  11,662  from holding EMCOR Group or generate 33.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

LION ONE METALS  vs.  EMCOR Group

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.

EMCOR Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, EMCOR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LION ONE and EMCOR

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

The idea behind LION ONE METALS and EMCOR Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.