Correlation Between NioCorp Developments and Fortune Rise

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

Diversification Opportunities for NioCorp Developments and Fortune Rise

-0.52

Correlation Coefficient

NioCorp Developments  Fortune Rise

Excellent diversification

The 3 months correlation between NioCorp and Fortune is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Fortune Rise Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Rise Acquisition 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 Fortune Rise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Rise Acquisition has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Fortune Rise go up and down completely randomly.

Pair Corralation between NioCorp Developments and Fortune Rise

Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Fortune Rise. In addition to that, NioCorp Developments is 10.4 times more volatile than Fortune Rise Acquisition. It trades about -0.07 of its total potential returns per unit of risk. Fortune Rise Acquisition is currently generating about 0.17 per unit of volatility. If you would invest  1,126  in Fortune Rise Acquisition on September 2, 2024 and sell it today you would earn a total of  43.00  from holding Fortune Rise Acquisition or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.69%
Values	Daily Returns

NioCorp Developments Ltd  vs.  Fortune Rise Acquisition

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 conflicting 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.

Fortune Rise Acquisition

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Fortune Rise Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fortune Rise is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NioCorp Developments and Fortune Rise

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

The idea behind NioCorp Developments Ltd and Fortune Rise Acquisition 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.