Correlation Between Nicola Mining and Alphabet

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

By analyzing existing cross correlation between Nicola Mining and Alphabet Inc CDR, you can compare the effects of market volatilities on Nicola Mining and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicola Mining and Alphabet.

Diversification Opportunities for Nicola Mining and Alphabet

-0.38

Correlation Coefficient

Nicola Mining  Alphabet

Very good diversification

The 3 months correlation between Nicola and Alphabet is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and Alphabet Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet CDR 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet CDR has no effect on the direction of Nicola Mining i.e., Nicola Mining and Alphabet go up and down completely randomly.

Pair Corralation between Nicola Mining and Alphabet

Assuming the 90 days horizon Nicola Mining is expected to generate 2.19 times more return on investment than Alphabet. However, Nicola Mining is 2.19 times more volatile than Alphabet Inc CDR. It trades about 0.08 of its potential returns per unit of risk. Alphabet Inc CDR is currently generating about 0.14 per unit of risk. If you would invest  28.00  in Nicola Mining on September 19, 2024 and sell it today you would earn a total of  2.00  from holding Nicola Mining or generate 7.14% return on investment over 90 days.

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

Nicola Mining  vs.  Alphabet Inc CDR

Nicola Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nicola Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nicola Mining is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Alphabet CDR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc CDR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Alphabet exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nicola Mining and Alphabet

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

The idea behind Nicola Mining and Alphabet Inc CDR 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.