Correlation Between New Energy and Lomiko Metals

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Can any of the company-specific risk be diversified away by investing in both New Energy and Lomiko Metals 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 New Energy and Lomiko Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Energy Metals and Lomiko Metals, you can compare the effects of market volatilities on New Energy and Lomiko Metals 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 New Energy with a short position of Lomiko Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Energy and Lomiko Metals.

Diversification Opportunities for New Energy and Lomiko Metals

NewLomikoDiversified AwayNewLomikoDiversified Away100%
-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between New and Lomiko is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding New Energy Metals and Lomiko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lomiko Metals and New Energy 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 New Energy Metals are associated (or correlated) with Lomiko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lomiko Metals has no effect on the direction of New Energy i.e., New Energy and Lomiko Metals go up and down completely randomly.

Pair Corralation between New Energy and Lomiko Metals

Assuming the 90 days horizon New Energy Metals is expected to generate 17.47 times more return on investment than Lomiko Metals. However, New Energy is 17.47 times more volatile than Lomiko Metals. It trades about 0.1 of its potential returns per unit of risk. Lomiko Metals is currently generating about 0.1 per unit of risk. If you would invest  31.00  in New Energy Metals on November 22, 2024 and sell it today you would lose (28.23) from holding New Energy Metals or give up 91.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

New Energy Metals  vs.  Lomiko Metals

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 02004006008001,000
JavaScript chart by amCharts 3.21.15NRGYF LMRMF
       Timeline  
New Energy Metals 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in New Energy Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, New Energy reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.025000000000000030.050.10.150.20.250.3
Lomiko Metals 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Lomiko Metals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Lomiko Metals reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.080.090.10.110.120.130.14

New Energy and Lomiko Metals Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-413.38-309.6-205.82-102.050.39105.35214.34323.32432.31541.29 0.0010.0020.0030.0040.0050.0060.007
JavaScript chart by amCharts 3.21.15NRGYF LMRMF
       Returns  

Pair Trading with New Energy and Lomiko Metals

The main advantage of trading using opposite New Energy and Lomiko Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Energy position performs unexpectedly, Lomiko Metals 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 Lomiko Metals will offset losses from the drop in Lomiko Metals' long position.
The idea behind New Energy Metals and Lomiko Metals 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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