Correlation Between Filo Mining and Premium Nickel

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

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

Diversification Opportunities for Filo Mining and Premium Nickel

0.87

Correlation Coefficient

Filo Mining  Premium Nickel

Very poor diversification

The 3 months correlation between Filo and Premium is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Filo Mining Corp and Premium Nickel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Nickel Resources and Filo 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 Filo Mining Corp are associated (or correlated) with Premium Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Nickel Resources has no effect on the direction of Filo Mining i.e., Filo Mining and Premium Nickel go up and down completely randomly.

Pair Corralation between Filo Mining and Premium Nickel

Assuming the 90 days horizon Filo Mining Corp is expected to generate 0.15 times more return on investment than Premium Nickel. However, Filo Mining Corp is 6.77 times less risky than Premium Nickel. It trades about -0.08 of its potential returns per unit of risk. Premium Nickel Resources is currently generating about -0.06 per unit of risk. If you would invest  2,223  in Filo Mining Corp on December 29, 2024 and sell it today you would lose (19.00) from holding Filo Mining Corp or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	46.67%
Values	Daily Returns

Filo Mining Corp  vs.  Premium Nickel Resources

Filo Mining Corp

Risk-Adjusted Performance

Very Weak

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

Premium Nickel Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premium Nickel Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Filo Mining and Premium Nickel

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

The idea behind Filo Mining Corp and Premium Nickel Resources 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.