Correlation Between Fathom Nickel and Cantex Mine

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

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

Diversification Opportunities for Fathom Nickel and Cantex Mine

-0.62

Correlation Coefficient

Fathom Nickel  Cantex Mine

Excellent diversification

The 3 months correlation between Fathom and Cantex is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Fathom Nickel and Cantex Mine Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantex Mine Development and Fathom Nickel 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 Fathom Nickel are associated (or correlated) with Cantex Mine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantex Mine Development has no effect on the direction of Fathom Nickel i.e., Fathom Nickel and Cantex Mine go up and down completely randomly.

Pair Corralation between Fathom Nickel and Cantex Mine

Assuming the 90 days horizon Fathom Nickel is expected to generate 3.22 times less return on investment than Cantex Mine. In addition to that, Fathom Nickel is 1.08 times more volatile than Cantex Mine Development. It trades about 0.04 of its total potential returns per unit of risk. Cantex Mine Development is currently generating about 0.14 per unit of volatility. If you would invest  7.23  in Cantex Mine Development on December 29, 2024 and sell it today you would earn a total of  6.77  from holding Cantex Mine Development or generate 93.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Fathom Nickel  vs.  Cantex Mine Development

Fathom Nickel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fathom Nickel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Fathom Nickel reported solid returns over the last few months and may actually be approaching a breakup point.

Cantex Mine Development

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cantex Mine Development are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Cantex Mine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fathom Nickel and Cantex Mine

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

The idea behind Fathom Nickel and Cantex Mine Development 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.