Correlation Between Bradda Head and Fathom Nickel

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

By analyzing existing cross correlation between Bradda Head Lithium and Fathom Nickel, you can compare the effects of market volatilities on Bradda Head and Fathom Nickel 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 Bradda Head with a short position of Fathom Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bradda Head and Fathom Nickel.

Diversification Opportunities for Bradda Head and Fathom Nickel

0.46

Correlation Coefficient

Bradda Head  Fathom Nickel

Very weak diversification

The 3 months correlation between Bradda and Fathom is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bradda Head Lithium and Fathom Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fathom Nickel and Bradda Head 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 Bradda Head Lithium are associated (or correlated) with Fathom Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fathom Nickel has no effect on the direction of Bradda Head i.e., Bradda Head and Fathom Nickel go up and down completely randomly.

Pair Corralation between Bradda Head and Fathom Nickel

Assuming the 90 days horizon Bradda Head Lithium is expected to under-perform the Fathom Nickel. In addition to that, Bradda Head is 1.02 times more volatile than Fathom Nickel. It trades about -0.01 of its total potential returns per unit of risk. Fathom Nickel is currently generating about 0.03 per unit of volatility. If you would invest  2.20  in Fathom Nickel on December 1, 2024 and sell it today you would lose (0.10) from holding Fathom Nickel or give up 4.55% of portfolio value over 90 days.

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

Bradda Head Lithium  vs.  Fathom Nickel

Bradda Head Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bradda Head Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Bradda Head is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fathom Nickel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fathom Nickel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Fathom Nickel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bradda Head and Fathom Nickel

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

The idea behind Bradda Head Lithium and Fathom Nickel 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.