Correlation Between Northcliff Resources and New Destiny

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Can any of the company-specific risk be diversified away by investing in both Northcliff Resources and New Destiny 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 Northcliff Resources and New Destiny into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northcliff Resources and New Destiny Mining, you can compare the effects of market volatilities on Northcliff Resources and New Destiny 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 Northcliff Resources with a short position of New Destiny. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northcliff Resources and New Destiny.

Diversification Opportunities for Northcliff Resources and New Destiny

NorthcliffNewDiversified AwayNorthcliffNewDiversified Away100%
0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Northcliff and New is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Northcliff Resources and New Destiny Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Destiny Mining and Northcliff Resources 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 Northcliff Resources are associated (or correlated) with New Destiny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Destiny Mining has no effect on the direction of Northcliff Resources i.e., Northcliff Resources and New Destiny go up and down completely randomly.

Pair Corralation between Northcliff Resources and New Destiny

Assuming the 90 days trading horizon Northcliff Resources is expected to generate 2.16 times more return on investment than New Destiny. However, Northcliff Resources is 2.16 times more volatile than New Destiny Mining. It trades about 0.22 of its potential returns per unit of risk. New Destiny Mining is currently generating about 0.22 per unit of risk. If you would invest  2.50  in Northcliff Resources on November 29, 2024 and sell it today you would earn a total of  1.50  from holding Northcliff Resources or generate 60.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Northcliff Resources  vs.  New Destiny Mining

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-2002040
JavaScript chart by amCharts 3.21.15NCF NED
       Timeline  
Northcliff Resources 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Northcliff Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Northcliff Resources displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.020.0250.030.0350.040.0450.050.055
New Destiny Mining 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in New Destiny Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, New Destiny showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.030.0350.040.0450.05

Northcliff Resources and New Destiny Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-42.34-31.71-21.08-10.450.1810.8721.9332.9944.04 0.00200.00250.00300.0035
JavaScript chart by amCharts 3.21.15NCF NED
       Returns  

Pair Trading with Northcliff Resources and New Destiny

The main advantage of trading using opposite Northcliff Resources and New Destiny positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northcliff Resources position performs unexpectedly, New Destiny 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 New Destiny will offset losses from the drop in New Destiny's long position.
The idea behind Northcliff Resources and New Destiny Mining 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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