Correlation Between Nordic Iron and White Pearl

Can any of the company-specific risk be diversified away by investing in both Nordic Iron and White Pearl 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 White Pearl 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 White Pearl Technology, you can compare the effects of market volatilities on Nordic Iron and White Pearl 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 White Pearl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Iron and White Pearl.

Diversification Opportunities for Nordic Iron and White Pearl

0.5

Correlation Coefficient

Nordic Iron  White Pearl

Very weak diversification

The 3 months correlation between Nordic and White is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Iron Ore and White Pearl Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Pearl Technology 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 White Pearl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Pearl Technology has no effect on the direction of Nordic Iron i.e., Nordic Iron and White Pearl go up and down completely randomly.

Pair Corralation between Nordic Iron and White Pearl

Assuming the 90 days trading horizon Nordic Iron is expected to generate 2.43 times less return on investment than White Pearl. In addition to that, Nordic Iron is 1.16 times more volatile than White Pearl Technology. It trades about 0.04 of its total potential returns per unit of risk. White Pearl Technology is currently generating about 0.11 per unit of volatility. If you would invest  582.00  in White Pearl Technology on December 1, 2024 and sell it today you would earn a total of  116.00  from holding White Pearl Technology or generate 19.93% 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.  White Pearl Technology

Nordic Iron Ore

Risk-Adjusted Performance

Insignificant

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

White Pearl Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in White Pearl Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, White Pearl sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordic Iron and White Pearl

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

The idea behind Nordic Iron Ore and White Pearl Technology 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.