Correlation Between Beowulf Mining and Nordic Iron

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

By analyzing existing cross correlation between Beowulf Mining PLC and Nordic Iron Ore, you can compare the effects of market volatilities on Beowulf Mining and Nordic Iron 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 Beowulf Mining with a short position of Nordic Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beowulf Mining and Nordic Iron.

Diversification Opportunities for Beowulf Mining and Nordic Iron

0.55

Correlation Coefficient

Beowulf Mining  Nordic Iron

Very weak diversification

The 3 months correlation between Beowulf and Nordic is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Beowulf Mining PLC and Nordic Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Iron Ore and Beowulf Mining 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 Beowulf Mining PLC are associated (or correlated) with Nordic Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Iron Ore has no effect on the direction of Beowulf Mining i.e., Beowulf Mining and Nordic Iron go up and down completely randomly.

Pair Corralation between Beowulf Mining and Nordic Iron

Assuming the 90 days trading horizon Beowulf Mining PLC is expected to generate 1.72 times more return on investment than Nordic Iron. However, Beowulf Mining is 1.72 times more volatile than Nordic Iron Ore. It trades about 0.31 of its potential returns per unit of risk. Nordic Iron Ore is currently generating about 0.17 per unit of risk. If you would invest  256.00  in Beowulf Mining PLC on December 1, 2024 and sell it today you would earn a total of  133.00  from holding Beowulf Mining PLC or generate 51.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Beowulf Mining PLC  vs.  Nordic Iron Ore

Beowulf Mining PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Beowulf Mining PLC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Beowulf Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Nordic Iron Ore

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Iron Ore are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Nordic Iron may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Beowulf Mining and Nordic Iron

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

The idea behind Beowulf Mining PLC and Nordic Iron Ore 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.