Correlation Between Lion Group and Lion Financial

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

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

Diversification Opportunities for Lion Group and Lion Financial

0.75

Correlation Coefficient

Lion Group  Lion Financial

Poor diversification

The 3 months correlation between Lion and Lion is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lion Group Holding and Lion Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Financial Group and Lion Group 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 Group Holding are associated (or correlated) with Lion Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Financial Group has no effect on the direction of Lion Group i.e., Lion Group and Lion Financial go up and down completely randomly.

Pair Corralation between Lion Group and Lion Financial

Given the investment horizon of 90 days Lion Group Holding is expected to under-perform the Lion Financial. In addition to that, Lion Group is 1.5 times more volatile than Lion Financial Group. It trades about -0.17 of its total potential returns per unit of risk. Lion Financial Group is currently generating about -0.14 per unit of volatility. If you would invest  0.85  in Lion Financial Group on January 11, 2025 and sell it today you would lose (0.32) from holding Lion Financial Group or give up 37.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Lion Group Holding  vs.  Lion Financial Group

Lion Group Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lion Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Lion Financial Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lion Financial Group 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 essential indicators remain fairly stable which may send shares a bit higher in May 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Lion Group and Lion Financial

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

The idea behind Lion Group Holding and Lion Financial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.