Correlation Between FPX Nickel and GoMgA Resources

Can any of the company-specific risk be diversified away by investing in both FPX Nickel and GoMgA 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 GoMgA 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 GoMgA Resources, you can compare the effects of market volatilities on FPX Nickel and GoMgA 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 GoMgA Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPX Nickel and GoMgA Resources.

Diversification Opportunities for FPX Nickel and GoMgA Resources

-0.28

Correlation Coefficient

FPX Nickel  GoMgA Resources

Very good diversification

The 3 months correlation between FPX and GoMgA is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding FPX Nickel Corp and GoMgA Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoMgA 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 GoMgA Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoMgA Resources has no effect on the direction of FPX Nickel i.e., FPX Nickel and GoMgA Resources go up and down completely randomly.

Pair Corralation between FPX Nickel and GoMgA Resources

Assuming the 90 days horizon FPX Nickel is expected to generate 2.16 times less return on investment than GoMgA Resources. But when comparing it to its historical volatility, FPX Nickel Corp is 1.48 times less risky than GoMgA Resources. It trades about 0.02 of its potential returns per unit of risk. GoMgA Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6.00  in GoMgA Resources on October 27, 2024 and sell it today you would earn a total of  0.00  from holding GoMgA Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FPX Nickel Corp  vs.  GoMgA Resources

FPX Nickel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

GoMgA Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GoMgA Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GoMgA Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FPX Nickel and GoMgA Resources

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

The idea behind FPX Nickel Corp and GoMgA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.