Correlation Between Nickel Mines and Silver Elephant

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

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

Diversification Opportunities for Nickel Mines and Silver Elephant

0.23

Correlation Coefficient

Nickel Mines  Silver Elephant

Modest diversification

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

Pair Corralation between Nickel Mines and Silver Elephant

Assuming the 90 days horizon Nickel Mines Limited is expected to under-perform the Silver Elephant. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nickel Mines Limited is 2.41 times less risky than Silver Elephant. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Silver Elephant Mining is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Silver Elephant Mining on December 2, 2024 and sell it today you would earn a total of  5.00  from holding Silver Elephant Mining or generate 45.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.02%
Values	Daily Returns

Nickel Mines Limited  vs.  Silver Elephant Mining

Nickel Mines Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nickel Mines Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Silver Elephant Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver Elephant Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental 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 Mines and Silver Elephant

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

The idea behind Nickel Mines Limited and Silver Elephant 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.