Correlation Between Namibia Critical and NGEx Minerals

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

Diversification Opportunities for Namibia Critical and NGEx Minerals

-0.52

Correlation Coefficient

Namibia Critical  NGEx Minerals

Excellent diversification

The 3 months correlation between Namibia and NGEx is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Namibia Critical Metals and NGEx Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGEx Minerals 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 NGEx Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGEx Minerals has no effect on the direction of Namibia Critical i.e., Namibia Critical and NGEx Minerals go up and down completely randomly.

Pair Corralation between Namibia Critical and NGEx Minerals

Assuming the 90 days horizon Namibia Critical is expected to generate 1.56 times less return on investment than NGEx Minerals. In addition to that, Namibia Critical is 4.06 times more volatile than NGEx Minerals. It trades about 0.03 of its total potential returns per unit of risk. NGEx Minerals is currently generating about 0.17 per unit of volatility. If you would invest  746.00  in NGEx Minerals on September 4, 2024 and sell it today you would earn a total of  180.00  from holding NGEx Minerals or generate 24.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Namibia Critical Metals  vs.  NGEx Minerals

Namibia Critical Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Namibia Critical Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Namibia Critical reported solid returns over the last few months and may actually be approaching a breakup point.

NGEx Minerals

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NGEx Minerals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NGEx Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Namibia Critical and NGEx Minerals

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

The idea behind Namibia Critical Metals and NGEx Minerals 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.