Correlation Between Nukkleus and Blue Lagoon

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

By analyzing existing cross correlation between Nukkleus and Blue Lagoon Resources, you can compare the effects of market volatilities on Nukkleus and Blue Lagoon 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 Nukkleus with a short position of Blue Lagoon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nukkleus and Blue Lagoon.

Diversification Opportunities for Nukkleus and Blue Lagoon

-0.41

Correlation Coefficient

Nukkleus  Blue Lagoon

Very good diversification

The 3 months correlation between Nukkleus and Blue is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nukkleus and Blue Lagoon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Lagoon Resources and Nukkleus 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 Nukkleus are associated (or correlated) with Blue Lagoon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Lagoon Resources has no effect on the direction of Nukkleus i.e., Nukkleus and Blue Lagoon go up and down completely randomly.

Pair Corralation between Nukkleus and Blue Lagoon

Given the investment horizon of 90 days Nukkleus is expected to under-perform the Blue Lagoon. In addition to that, Nukkleus is 1.02 times more volatile than Blue Lagoon Resources. It trades about -0.08 of its total potential returns per unit of risk. Blue Lagoon Resources is currently generating about 0.13 per unit of volatility. If you would invest  11.00  in Blue Lagoon Resources on December 20, 2024 and sell it today you would earn a total of  8.00  from holding Blue Lagoon Resources or generate 72.73% return on investment over 90 days.

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

Nukkleus  vs.  Blue Lagoon Resources

Nukkleus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nukkleus has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Blue Lagoon Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Lagoon Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Blue Lagoon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nukkleus and Blue Lagoon

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

The idea behind Nukkleus and Blue Lagoon Resources 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..