Correlation Between NioCorp Developments and Euro Manganese

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

Diversification Opportunities for NioCorp Developments and Euro Manganese

0.12

Correlation Coefficient

NioCorp Developments  Euro Manganese

Average diversification

The 3 months correlation between NioCorp and Euro is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Euro Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Manganese 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 Euro Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Manganese has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Euro Manganese go up and down completely randomly.

Pair Corralation between NioCorp Developments and Euro Manganese

Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to generate 4.95 times more return on investment than Euro Manganese. However, NioCorp Developments is 4.95 times more volatile than Euro Manganese. It trades about 0.04 of its potential returns per unit of risk. Euro Manganese is currently generating about -0.02 per unit of risk. If you would invest  80.00  in NioCorp Developments Ltd on September 3, 2024 and sell it today you would earn a total of  53.00  from holding NioCorp Developments Ltd or generate 66.25% return on investment over 90 days.

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

NioCorp Developments Ltd  vs.  Euro Manganese

NioCorp Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NioCorp Developments Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Euro Manganese

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NioCorp Developments and Euro Manganese

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

The idea behind NioCorp Developments Ltd and Euro Manganese 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.