Correlation Between Namibia Critical and Fathom Nickel

Can any of the company-specific risk be diversified away by investing in both Namibia Critical and Fathom Nickel 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 Namibia Critical and Fathom Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Namibia Critical Metals and Fathom Nickel, you can compare the effects of market volatilities on Namibia Critical and Fathom Nickel 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 Namibia Critical with a short position of Fathom Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namibia Critical and Fathom Nickel.

Diversification Opportunities for Namibia Critical and Fathom Nickel

0.44

Correlation Coefficient

Namibia Critical  Fathom Nickel

Very weak diversification

The 3 months correlation between Namibia and Fathom is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Namibia Critical Metals and Fathom Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fathom Nickel and Namibia Critical 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 Namibia Critical Metals are associated (or correlated) with Fathom Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fathom Nickel has no effect on the direction of Namibia Critical i.e., Namibia Critical and Fathom Nickel go up and down completely randomly.

Pair Corralation between Namibia Critical and Fathom Nickel

Assuming the 90 days horizon Namibia Critical Metals is expected to generate 1.44 times more return on investment than Fathom Nickel. However, Namibia Critical is 1.44 times more volatile than Fathom Nickel. It trades about 0.0 of its potential returns per unit of risk. Fathom Nickel is currently generating about -0.05 per unit of risk. If you would invest  2.65  in Namibia Critical Metals on September 3, 2024 and sell it today you would lose (0.65) from holding Namibia Critical Metals or give up 24.53% of portfolio value over 90 days.

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

Namibia Critical Metals  vs.  Fathom Nickel

Namibia Critical Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Namibia Critical Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Namibia Critical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fathom Nickel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fathom Nickel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Namibia Critical and Fathom Nickel

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

The idea behind Namibia Critical Metals and Fathom Nickel 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.