Correlation Between LION ONE and SHIN ETSU

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

Diversification Opportunities for LION ONE and SHIN ETSU

0.51

Correlation Coefficient

LION ONE  SHIN ETSU

Very weak diversification

The 3 months correlation between LION and SHIN is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL 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 SHIN ETSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIN ETSU CHEMICAL has no effect on the direction of LION ONE i.e., LION ONE and SHIN ETSU go up and down completely randomly.

Pair Corralation between LION ONE and SHIN ETSU

Assuming the 90 days trading horizon LION ONE METALS is expected to generate 2.39 times more return on investment than SHIN ETSU. However, LION ONE is 2.39 times more volatile than SHIN ETSU CHEMICAL. It trades about 0.0 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about -0.13 per unit of risk. If you would invest  20.00  in LION ONE METALS on September 24, 2024 and sell it today you would lose (1.00) from holding LION ONE METALS or give up 5.0% of portfolio value over 90 days.

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

LION ONE METALS  vs.  SHIN ETSU CHEMICAL

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 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.

SHIN ETSU CHEMICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIN ETSU CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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 SHIN ETSU

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

The idea behind LION ONE METALS and SHIN ETSU CHEMICAL 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.