Correlation Between Elcora Advanced and SPC Nickel

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

By analyzing existing cross correlation between Elcora Advanced Materials and SPC Nickel Corp, you can compare the effects of market volatilities on Elcora Advanced and SPC 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 Elcora Advanced with a short position of SPC Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcora Advanced and SPC Nickel.

Diversification Opportunities for Elcora Advanced and SPC Nickel

-0.06

Correlation Coefficient

Elcora Advanced  SPC Nickel

Good diversification

The 3 months correlation between Elcora and SPC is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Elcora Advanced Materials and SPC Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPC Nickel Corp and Elcora Advanced 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 Elcora Advanced Materials are associated (or correlated) with SPC Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPC Nickel Corp has no effect on the direction of Elcora Advanced i.e., Elcora Advanced and SPC Nickel go up and down completely randomly.

Pair Corralation between Elcora Advanced and SPC Nickel

Assuming the 90 days horizon Elcora Advanced Materials is expected to generate 35.53 times more return on investment than SPC Nickel. However, Elcora Advanced is 35.53 times more volatile than SPC Nickel Corp. It trades about 0.45 of its potential returns per unit of risk. SPC Nickel Corp is currently generating about 0.02 per unit of risk. If you would invest  60.00  in Elcora Advanced Materials on December 1, 2024 and sell it today you would lose (51.00) from holding Elcora Advanced Materials or give up 85.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.39%
Values	Daily Returns

Elcora Advanced Materials  vs.  SPC Nickel Corp

Elcora Advanced Materials

Risk-Adjusted Performance

Very Strong

Over the last 90 days Elcora Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Elcora Advanced reported solid returns over the last few months and may actually be approaching a breakup point.

SPC Nickel Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPC Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Elcora Advanced and SPC Nickel

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

The idea behind Elcora Advanced Materials and SPC Nickel Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.