Correlation Between NioCorp Developments and Sun Summit

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

Diversification Opportunities for NioCorp Developments and Sun Summit

0.35

Correlation Coefficient

NioCorp Developments  Sun Summit

Weak diversification

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

Pair Corralation between NioCorp Developments and Sun Summit

Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to generate 0.67 times more return on investment than Sun Summit. However, NioCorp Developments Ltd is 1.48 times less risky than Sun Summit. It trades about 0.17 of its potential returns per unit of risk. Sun Summit Minerals is currently generating about 0.0 per unit of risk. If you would invest  141.00  in NioCorp Developments Ltd on December 27, 2024 and sell it today you would earn a total of  89.00  from holding NioCorp Developments Ltd or generate 63.12% return on investment over 90 days.

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

NioCorp Developments Ltd  vs.  Sun Summit Minerals

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

Sun Summit Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Summit Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Sun Summit is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NioCorp Developments and Sun Summit

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

The idea behind NioCorp Developments Ltd and Sun Summit Minerals 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.