Correlation Between Nicola Mining and Lion One

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

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

Diversification Opportunities for Nicola Mining and Lion One

0.01

Correlation Coefficient

Nicola Mining  Lion One

Significant diversification

The 3 months correlation between Nicola and Lion is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Nicola Mining i.e., Nicola Mining and Lion One go up and down completely randomly.

Pair Corralation between Nicola Mining and Lion One

Assuming the 90 days horizon Nicola Mining is expected to under-perform the Lion One. In addition to that, Nicola Mining is 1.36 times more volatile than Lion One Metals. It trades about -0.09 of its total potential returns per unit of risk. Lion One Metals is currently generating about 0.03 per unit of volatility. If you would invest  28.00  in Lion One Metals on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Lion One Metals or generate 3.57% return on investment over 90 days.

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

Nicola Mining  vs.  Lion One Metals

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Lion One Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lion One Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lion One may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nicola Mining and Lion One

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

The idea behind Nicola Mining and Lion One Metals 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.