Correlation Between Nickel Creek and Gratomic

Can any of the company-specific risk be diversified away by investing in both Nickel Creek and Gratomic 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 Nickel Creek and Gratomic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nickel Creek Platinum and Gratomic, you can compare the effects of market volatilities on Nickel Creek and Gratomic 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 Nickel Creek with a short position of Gratomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Creek and Gratomic.

Diversification Opportunities for Nickel Creek and Gratomic

0.07

Correlation Coefficient

Nickel Creek  Gratomic

Significant diversification

The 3 months correlation between Nickel and Gratomic is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Creek Platinum and Gratomic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gratomic and Nickel Creek 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 Nickel Creek Platinum are associated (or correlated) with Gratomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gratomic has no effect on the direction of Nickel Creek i.e., Nickel Creek and Gratomic go up and down completely randomly.

Pair Corralation between Nickel Creek and Gratomic

Assuming the 90 days horizon Nickel Creek Platinum is expected to generate 0.72 times more return on investment than Gratomic. However, Nickel Creek Platinum is 1.39 times less risky than Gratomic. It trades about -0.02 of its potential returns per unit of risk. Gratomic is currently generating about -0.06 per unit of risk. If you would invest  43.00  in Nickel Creek Platinum on December 29, 2024 and sell it today you would lose (6.00) from holding Nickel Creek Platinum or give up 13.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Nickel Creek Platinum  vs.  Gratomic

Nickel Creek Platinum

Risk-Adjusted Performance

Very Weak

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

Gratomic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gratomic 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 essential 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 Nickel Creek and Gratomic

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

The idea behind Nickel Creek Platinum and Gratomic 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.