Correlation Between Nickel Creek and ZincX Resources

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

Diversification Opportunities for Nickel Creek and ZincX Resources

0.23

Correlation Coefficient

Nickel Creek  ZincX Resources

Modest diversification

The 3 months correlation between Nickel and ZincX is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Creek Platinum and ZincX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZincX Resources Corp 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 ZincX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZincX Resources Corp has no effect on the direction of Nickel Creek i.e., Nickel Creek and ZincX Resources go up and down completely randomly.

Pair Corralation between Nickel Creek and ZincX Resources

Assuming the 90 days horizon Nickel Creek Platinum is expected to under-perform the ZincX Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Nickel Creek Platinum is 1.08 times less risky than ZincX Resources. The otc stock trades about -0.02 of its potential returns per unit of risk. The ZincX Resources Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5.00  in ZincX Resources Corp on December 28, 2024 and sell it today you would earn a total of  2.00  from holding ZincX Resources Corp or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Nickel Creek Platinum  vs.  ZincX Resources Corp

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.

ZincX Resources Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZincX Resources Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ZincX Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nickel Creek and ZincX Resources

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

The idea behind Nickel Creek Platinum and ZincX Resources Corp 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.