Correlation Between Sparx Technology and Lion One

Can any of the company-specific risk be diversified away by investing in both Sparx Technology and Lion One 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 Sparx Technology and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sparx Technology and Lion One Metals, you can compare the effects of market volatilities on Sparx Technology and Lion One 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 Sparx Technology with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparx Technology and Lion One.

Diversification Opportunities for Sparx Technology and Lion One

0.24

Correlation Coefficient

Sparx Technology  Lion One

Modest diversification

The 3 months correlation between Sparx and Lion is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sparx Technology and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and Sparx Technology 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 Sparx Technology are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Sparx Technology i.e., Sparx Technology and Lion One go up and down completely randomly.

Pair Corralation between Sparx Technology and Lion One

Assuming the 90 days trading horizon Sparx Technology is expected to generate 0.57 times more return on investment than Lion One. However, Sparx Technology is 1.77 times less risky than Lion One. It trades about 0.13 of its potential returns per unit of risk. Lion One Metals is currently generating about 0.02 per unit of risk. If you would invest  2,248  in Sparx Technology on August 30, 2024 and sell it today you would earn a total of  344.00  from holding Sparx Technology or generate 15.3% return on investment over 90 days.

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

Sparx Technology  vs.  Lion One Metals

Sparx Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Lion One Metals

Risk-Adjusted Performance

1 of 100

Very 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 fairly stable basic indicators, Lion One is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sparx Technology and Lion One

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

The idea behind Sparx Technology and Lion One Metals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.