Correlation Between FPX Nickel and Decade Resources

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

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

Diversification Opportunities for FPX Nickel and Decade Resources

0.1

Correlation Coefficient

FPX Nickel  Decade Resources

Average diversification

The 3 months correlation between FPX and Decade is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding FPX Nickel Corp and Decade Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decade Resources and FPX 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 FPX Nickel Corp are associated (or correlated) with Decade Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decade Resources has no effect on the direction of FPX Nickel i.e., FPX Nickel and Decade Resources go up and down completely randomly.

Pair Corralation between FPX Nickel and Decade Resources

Assuming the 90 days horizon FPX Nickel is expected to generate 4.52 times less return on investment than Decade Resources. But when comparing it to its historical volatility, FPX Nickel Corp is 3.92 times less risky than Decade Resources. It trades about 0.04 of its potential returns per unit of risk. Decade Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Decade Resources on December 19, 2024 and sell it today you would lose (0.35) from holding Decade Resources or give up 14.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

FPX Nickel Corp  vs.  Decade Resources

FPX Nickel Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FPX Nickel Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, FPX Nickel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Decade Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Decade Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Decade Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FPX Nickel and Decade Resources

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

The idea behind FPX Nickel Corp and Decade 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.