Correlation Between Palamina Corp and Nine Mile

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

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

Diversification Opportunities for Palamina Corp and Nine Mile

0.3

Correlation Coefficient

Palamina Corp  Nine Mile

Weak diversification

The 3 months correlation between Palamina and Nine is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Palamina Corp and Nine Mile Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Mile Metals and Palamina Corp 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 Palamina Corp are associated (or correlated) with Nine Mile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Mile Metals has no effect on the direction of Palamina Corp i.e., Palamina Corp and Nine Mile go up and down completely randomly.

Pair Corralation between Palamina Corp and Nine Mile

Assuming the 90 days horizon Palamina Corp is expected to generate 0.64 times more return on investment than Nine Mile. However, Palamina Corp is 1.57 times less risky than Nine Mile. It trades about 0.04 of its potential returns per unit of risk. Nine Mile Metals is currently generating about 0.01 per unit of risk. If you would invest  6.70  in Palamina Corp on December 29, 2024 and sell it today you would earn a total of  0.24  from holding Palamina Corp or generate 3.58% return on investment over 90 days.

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

Palamina Corp  vs.  Nine Mile Metals

Palamina Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Palamina Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Palamina Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Nine Mile Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Mile Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nine Mile may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Palamina Corp and Nine Mile

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

The idea behind Palamina Corp and Nine Mile 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.