Correlation Between Grid Metals and Flying Nickel

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

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

Diversification Opportunities for Grid Metals and Flying Nickel

-0.02

Correlation Coefficient

Grid Metals  Flying Nickel

Good diversification

The 3 months correlation between Grid and Flying is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and Flying Nickel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flying Nickel Mining and Grid Metals 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 Grid Metals Corp are associated (or correlated) with Flying Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flying Nickel Mining has no effect on the direction of Grid Metals i.e., Grid Metals and Flying Nickel go up and down completely randomly.

Pair Corralation between Grid Metals and Flying Nickel

Assuming the 90 days trading horizon Grid Metals Corp is expected to generate 1.38 times more return on investment than Flying Nickel. However, Grid Metals is 1.38 times more volatile than Flying Nickel Mining. It trades about 0.11 of its potential returns per unit of risk. Flying Nickel Mining is currently generating about 0.03 per unit of risk. If you would invest  3.50  in Grid Metals Corp on October 27, 2024 and sell it today you would earn a total of  0.50  from holding Grid Metals Corp or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	30.0%
Values	Daily Returns

Grid Metals Corp  vs.  Flying Nickel Mining

Grid Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grid Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Flying Nickel Mining

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Flying Nickel Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unfluctuating basic indicators, Flying Nickel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Grid Metals and Flying Nickel

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

The idea behind Grid Metals Corp and Flying Nickel Mining 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.