Correlation Between Lion One and Sparx Technology

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

Diversification Opportunities for Lion One and Sparx Technology

0.16

Correlation Coefficient

Lion One  Sparx Technology

Average diversification

The 3 months correlation between Lion and Sparx is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology 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 Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of Lion One i.e., Lion One and Sparx Technology go up and down completely randomly.

Pair Corralation between Lion One and Sparx Technology

Assuming the 90 days horizon Lion One is expected to generate 12.92 times less return on investment than Sparx Technology. In addition to that, Lion One is 1.69 times more volatile than Sparx Technology. It trades about 0.02 of its total potential returns per unit of risk. Sparx Technology is currently generating about 0.35 per unit of volatility. If you would invest  2,086  in Sparx Technology on April 24, 2025 and sell it today you would earn a total of  995.00  from holding Sparx Technology or generate 47.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Lion One Metals  vs.  Sparx Technology

Lion One Metals

Risk-Adjusted Performance

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.

Sparx Technology

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion One and Sparx Technology

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

The idea behind Lion One Metals and Sparx Technology 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.