Correlation Between Nordic Iron and Beowulf Mining

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

By analyzing existing cross correlation between Nordic Iron Ore and Beowulf Mining PLC, you can compare the effects of market volatilities on Nordic Iron and Beowulf Mining 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 Nordic Iron with a short position of Beowulf Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Iron and Beowulf Mining.

Diversification Opportunities for Nordic Iron and Beowulf Mining

0.53

Correlation Coefficient

Nordic Iron  Beowulf Mining

Very weak diversification

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

Pair Corralation between Nordic Iron and Beowulf Mining

Assuming the 90 days trading horizon Nordic Iron is expected to generate 107.41 times less return on investment than Beowulf Mining. But when comparing it to its historical volatility, Nordic Iron Ore is 12.26 times less risky than Beowulf Mining. It trades about 0.0 of its potential returns per unit of risk. Beowulf Mining PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Beowulf Mining PLC on November 21, 2024 and sell it today you would earn a total of  231.00  from holding Beowulf Mining PLC or generate 796.55% return on investment over 90 days.

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

Nordic Iron Ore  vs.  Beowulf Mining PLC

Nordic Iron Ore

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Iron Ore are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Nordic Iron unveiled solid returns over the last few months and may actually be approaching a breakup point.

Beowulf Mining PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Beowulf Mining PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Beowulf Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordic Iron and Beowulf Mining

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

The idea behind Nordic Iron Ore and Beowulf Mining PLC 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.