Correlation Between Nicola Mining and Stampede Drilling

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

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

Diversification Opportunities for Nicola Mining and Stampede Drilling

-0.47

Correlation Coefficient

Nicola Mining  Stampede Drilling

Very good diversification

The 3 months correlation between Nicola and Stampede is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling 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 Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of Nicola Mining i.e., Nicola Mining and Stampede Drilling go up and down completely randomly.

Pair Corralation between Nicola Mining and Stampede Drilling

Assuming the 90 days horizon Nicola Mining is expected to generate 0.76 times more return on investment than Stampede Drilling. However, Nicola Mining is 1.32 times less risky than Stampede Drilling. It trades about 0.13 of its potential returns per unit of risk. Stampede Drilling is currently generating about -0.05 per unit of risk. If you would invest  28.00  in Nicola Mining on December 22, 2024 and sell it today you would earn a total of  9.00  from holding Nicola Mining or generate 32.14% return on investment over 90 days.

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

Nicola Mining  vs.  Stampede Drilling

Nicola Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nicola Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nicola Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Stampede Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nicola Mining and Stampede Drilling

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

The idea behind Nicola Mining and Stampede Drilling 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.