Correlation Between East Side and Nicola Mining

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

By analyzing existing cross correlation between East Side Games and Nicola Mining, you can compare the effects of market volatilities on East Side and Nicola Mining 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 East Side with a short position of Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Side and Nicola Mining.

Diversification Opportunities for East Side and Nicola Mining

0.2

Correlation Coefficient

East Side  Nicola Mining

Modest diversification

The 3 months correlation between East and Nicola is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and East Side 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 East Side Games are associated (or correlated) with Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of East Side i.e., East Side and Nicola Mining go up and down completely randomly.

Pair Corralation between East Side and Nicola Mining

Assuming the 90 days trading horizon East Side Games is expected to under-perform the Nicola Mining. But the stock apears to be less risky and, when comparing its historical volatility, East Side Games is 1.02 times less risky than Nicola Mining. The stock trades about -0.04 of its potential returns per unit of risk. The Nicola Mining is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Nicola Mining on October 7, 2024 and sell it today you would lose (5.00) from holding Nicola Mining or give up 15.15% of portfolio value over 90 days.

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

East Side Games  vs.  Nicola Mining

East Side Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Side Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Nicola Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nicola Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with East Side and Nicola Mining

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

The idea behind East Side Games and Nicola Mining 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 Transaction History module to view history of all your transactions and understand their impact on performance.