Correlation Between NioCorp Developments and Alpha Metallurgical

Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and Alpha Metallurgical 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 NioCorp Developments and Alpha Metallurgical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NioCorp Developments Ltd and Alpha Metallurgical Resources, you can compare the effects of market volatilities on NioCorp Developments and Alpha Metallurgical 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 NioCorp Developments with a short position of Alpha Metallurgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Alpha Metallurgical.

Diversification Opportunities for NioCorp Developments and Alpha Metallurgical

-0.35

Correlation Coefficient

NioCorp Developments  Alpha Metallurgical

Very good diversification

The 3 months correlation between NioCorp and Alpha is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Alpha Metallurgical Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Metallurgical and NioCorp Developments 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 NioCorp Developments Ltd are associated (or correlated) with Alpha Metallurgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Metallurgical has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Alpha Metallurgical go up and down completely randomly.

Pair Corralation between NioCorp Developments and Alpha Metallurgical

Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to generate 1.8 times more return on investment than Alpha Metallurgical. However, NioCorp Developments is 1.8 times more volatile than Alpha Metallurgical Resources. It trades about 0.16 of its potential returns per unit of risk. Alpha Metallurgical Resources is currently generating about -0.21 per unit of risk. If you would invest  147.00  in NioCorp Developments Ltd on December 26, 2024 and sell it today you would earn a total of  83.00  from holding NioCorp Developments Ltd or generate 56.46% return on investment over 90 days.

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

NioCorp Developments Ltd  vs.  Alpha Metallurgical Resources

NioCorp Developments

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NioCorp Developments Ltd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, NioCorp Developments sustained solid returns over the last few months and may actually be approaching a breakup point.

Alpha Metallurgical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpha Metallurgical Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with NioCorp Developments and Alpha Metallurgical

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

The idea behind NioCorp Developments Ltd and Alpha Metallurgical 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..