Correlation Between NeuPath Health and Lion One

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

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

Diversification Opportunities for NeuPath Health and Lion One

0.17

Correlation Coefficient

NeuPath Health  Lion One

Average diversification

The 3 months correlation between NeuPath and Lion is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NeuPath Health 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 NeuPath Health 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 NeuPath Health 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 NeuPath Health i.e., NeuPath Health and Lion One go up and down completely randomly.

Pair Corralation between NeuPath Health and Lion One

Assuming the 90 days trading horizon NeuPath Health is expected to generate 3.22 times less return on investment than Lion One. In addition to that, NeuPath Health is 1.56 times more volatile than Lion One Metals. It trades about 0.02 of its total potential returns per unit of risk. Lion One Metals is currently generating about 0.09 per unit of volatility. If you would invest  46.00  in Lion One Metals on January 29, 2024 and sell it today you would earn a total of  2.00  from holding Lion One Metals or generate 4.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

NeuPath Health  vs.  Lion One Metals

NeuPath Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeuPath Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NeuPath Health is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with NeuPath Health and Lion One

The main advantage of trading using opposite NeuPath Health and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NeuPath Health 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 NeuPath Health 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.