Correlation Between Nortec Minerals and Canaf Investments

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

By analyzing existing cross correlation between Nortec Minerals Corp and Canaf Investments, you can compare the effects of market volatilities on Nortec Minerals and Canaf Investments 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 Nortec Minerals with a short position of Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nortec Minerals and Canaf Investments.

Diversification Opportunities for Nortec Minerals and Canaf Investments

-0.01

Correlation Coefficient

Nortec Minerals  Canaf Investments

Good diversification

The 3 months correlation between Nortec and Canaf is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nortec Minerals Corp and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments and Nortec Minerals 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 Nortec Minerals Corp are associated (or correlated) with Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of Nortec Minerals i.e., Nortec Minerals and Canaf Investments go up and down completely randomly.

Pair Corralation between Nortec Minerals and Canaf Investments

Assuming the 90 days horizon Nortec Minerals Corp is expected to generate 2.72 times more return on investment than Canaf Investments. However, Nortec Minerals is 2.72 times more volatile than Canaf Investments. It trades about 0.04 of its potential returns per unit of risk. Canaf Investments is currently generating about -0.03 per unit of risk. If you would invest  2.00  in Nortec Minerals Corp on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Nortec Minerals Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Nortec Minerals Corp  vs.  Canaf Investments

Nortec Minerals Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nortec Minerals Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nortec Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Canaf Investments

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canaf Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Canaf Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nortec Minerals and Canaf Investments

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

The idea behind Nortec Minerals Corp and Canaf Investments 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.