Correlation Between NH Foods and NioCorp Developments

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

By analyzing existing cross correlation between NH Foods Ltd and NioCorp Developments Ltd, you can compare the effects of market volatilities on NH Foods and NioCorp Developments 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 NH Foods with a short position of NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and NioCorp Developments.

Diversification Opportunities for NH Foods and NioCorp Developments

0.0

Correlation Coefficient

NH Foods  NioCorp Developments

Pay attention - limited upside

The 3 months correlation between NIPMY and NioCorp is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods Ltd and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments and NH Foods 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 NH Foods Ltd are associated (or correlated) with NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of NH Foods i.e., NH Foods and NioCorp Developments go up and down completely randomly.

Pair Corralation between NH Foods and NioCorp Developments

If you would invest  10.00  in NioCorp Developments Ltd on December 20, 2024 and sell it today you would earn a total of  7.98  from holding NioCorp Developments Ltd or generate 79.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

NH Foods Ltd  vs.  NioCorp Developments Ltd

NH Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days NH Foods Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, NH Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NioCorp Developments

Risk-Adjusted Performance

OK

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

Pair Trading with NH Foods and NioCorp Developments

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

The idea behind NH Foods Ltd and NioCorp Developments Ltd 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.