Correlation Between NioCorp Developments and Azimut Exploration

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

Diversification Opportunities for NioCorp Developments and Azimut Exploration

-0.19

Correlation Coefficient

NioCorp Developments  Azimut Exploration

Good diversification

The 3 months correlation between NioCorp and Azimut is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Azimut Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azimut Exploration 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 Azimut Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azimut Exploration has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Azimut Exploration go up and down completely randomly.

Pair Corralation between NioCorp Developments and Azimut Exploration

Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to generate 1.59 times more return on investment than Azimut Exploration. However, NioCorp Developments is 1.59 times more volatile than Azimut Exploration. It trades about 0.14 of its potential returns per unit of risk. Azimut Exploration is currently generating about -0.07 per unit of risk. If you would invest  133.00  in NioCorp Developments Ltd on December 1, 2024 and sell it today you would earn a total of  61.00  from holding NioCorp Developments Ltd or generate 45.86% 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.  Azimut Exploration

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 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, NioCorp Developments sustained solid returns over the last few months and may actually be approaching a breakup point.

Azimut Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Azimut Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NioCorp Developments and Azimut Exploration

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

The idea behind NioCorp Developments Ltd and Azimut Exploration 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.