Correlation Between Norwest Minerals and Lindian Resources

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

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

Diversification Opportunities for Norwest Minerals and Lindian Resources

-0.33

Correlation Coefficient

Norwest Minerals  Lindian Resources

Very good diversification

The 3 months correlation between Norwest and Lindian is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Norwest Minerals and Lindian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindian Resources and Norwest 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 Norwest Minerals are associated (or correlated) with Lindian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindian Resources has no effect on the direction of Norwest Minerals i.e., Norwest Minerals and Lindian Resources go up and down completely randomly.

Pair Corralation between Norwest Minerals and Lindian Resources

Assuming the 90 days trading horizon Norwest Minerals is expected to under-perform the Lindian Resources. In addition to that, Norwest Minerals is 1.52 times more volatile than Lindian Resources. It trades about -0.08 of its total potential returns per unit of risk. Lindian Resources is currently generating about 0.02 per unit of volatility. If you would invest  9.60  in Lindian Resources on December 2, 2024 and sell it today you would lose (0.10) from holding Lindian Resources or give up 1.04% of portfolio value over 90 days.

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

Norwest Minerals  vs.  Lindian Resources

Norwest Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Norwest Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lindian Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lindian Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Lindian Resources is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Norwest Minerals and Lindian Resources

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

The idea behind Norwest Minerals and Lindian 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.