Correlation Between Nicola Mining and Data Communications

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

By analyzing existing cross correlation between Nicola Mining and Data Communications Management, you can compare the effects of market volatilities on Nicola Mining and Data Communications 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 Nicola Mining with a short position of Data Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicola Mining and Data Communications.

Diversification Opportunities for Nicola Mining and Data Communications

-0.2

Correlation Coefficient

Nicola Mining  Data Communications

Good diversification

The 3 months correlation between Nicola and Data is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and Data Communications Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Communications and Nicola Mining 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 Nicola Mining are associated (or correlated) with Data Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Communications has no effect on the direction of Nicola Mining i.e., Nicola Mining and Data Communications go up and down completely randomly.

Pair Corralation between Nicola Mining and Data Communications

Assuming the 90 days horizon Nicola Mining is expected to generate 2.07 times more return on investment than Data Communications. However, Nicola Mining is 2.07 times more volatile than Data Communications Management. It trades about 0.03 of its potential returns per unit of risk. Data Communications Management is currently generating about 0.02 per unit of risk. If you would invest  32.00  in Nicola Mining on December 4, 2024 and sell it today you would lose (1.00) from holding Nicola Mining or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Nicola Mining  vs.  Data Communications Management

Nicola Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nicola Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Nicola Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Data Communications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Data Communications Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Data Communications may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nicola Mining and Data Communications

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

The idea behind Nicola Mining and Data Communications Management 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 Anywhere module to track or share privately all of your investments from the convenience of any device.