Correlation Between The9 and NioCorp Developments

Can any of the company-specific risk be diversified away by investing in both The9 and NioCorp Developments 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 The9 and NioCorp Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The9 Ltd ADR and NioCorp Developments Ltd, you can compare the effects of market volatilities on The9 and NioCorp Developments 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 The9 with a short position of NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of The9 and NioCorp Developments.

Diversification Opportunities for The9 and NioCorp Developments

0.18

Correlation Coefficient

The9  NioCorp Developments

Average diversification

The 3 months correlation between The9 and NioCorp is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding The9 Ltd ADR and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments and The9 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 The9 Ltd ADR are associated (or correlated) with NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of The9 i.e., The9 and NioCorp Developments go up and down completely randomly.

Pair Corralation between The9 and NioCorp Developments

Given the investment horizon of 90 days The9 Ltd ADR is expected to under-perform the NioCorp Developments. In addition to that, The9 is 1.01 times more volatile than NioCorp Developments Ltd. It trades about -0.04 of its total potential returns per unit of risk. NioCorp Developments Ltd is currently generating about 0.15 per unit of volatility. If you would invest  133.00  in NioCorp Developments Ltd on November 29, 2024 and sell it today you would earn a total of  66.00  from holding NioCorp Developments Ltd or generate 49.62% return on investment over 90 days.

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

The9 Ltd ADR  vs.  NioCorp Developments Ltd

The9 Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days The9 Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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

Pair Trading with The9 and NioCorp Developments

The main advantage of trading using opposite The9 and NioCorp Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The9 position performs unexpectedly, NioCorp Developments 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 NioCorp Developments will offset losses from the drop in NioCorp Developments' long position.

The idea behind The9 Ltd ADR and NioCorp Developments Ltd 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.