Correlation Between Nickel Mines and ATT

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

Diversification Opportunities for Nickel Mines and ATT

-0.53

Correlation Coefficient

Nickel Mines  ATT

Excellent diversification

The 3 months correlation between Nickel and ATT is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Mines Limited and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Nickel Mines i.e., Nickel Mines and ATT go up and down completely randomly.

Pair Corralation between Nickel Mines and ATT

Assuming the 90 days horizon Nickel Mines Limited is expected to under-perform the ATT. In addition to that, Nickel Mines is 2.99 times more volatile than ATT Inc. It trades about -0.05 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.25 per unit of volatility. If you would invest  2,241  in ATT Inc on December 1, 2024 and sell it today you would earn a total of  500.00  from holding ATT Inc or generate 22.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Nickel Mines Limited  vs.  ATT Inc

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.

ATT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nickel Mines and ATT

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

The idea behind Nickel Mines Limited and ATT Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.