diversifiable risk of combining Lion One and CHAR Technologies 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 CHAR Technologies, you can compare the effects of market volatilities on Lion One and CHAR Technologies 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 CHAR Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and CHAR Technologies.
Diversification Opportunities for Lion One and CHAR Technologies
Pair Corralation between Lion One and CHAR Technologies
Assuming the 90 days horizon Lion One Metals is expected to under-perform the CHAR Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 1.28 times less risky than CHAR Technologies. The stock trades about -0.27 of its potential returns per unit of risk. The CHAR Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 48.00 in CHAR Technologies on December 3, 2023 and sell it today you would earn a total of 0.00 from holding CHAR Technologies or generate 0.0% return on investment over 90 days.
Lion One Metals vs. CHAR Technologies
Lion One and CHAR Technologies Volatility Contrast
Pair Trading with Lion One and CHAR TechnologiesThe main advantage of trading using opposite Lion One and CHAR Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, CHAR Technologies 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 CHAR Technologies will offset losses from the drop in CHAR Technologies' long position. The idea behind Lion One Metals and CHAR Technologies 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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