Correlation Between Richelieu Hardware and Nicola Mining

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

Diversification Opportunities for Richelieu Hardware and Nicola Mining

RichelieuNicolaDiversified AwayRichelieuNicolaDiversified Away100%
-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Richelieu and Nicola is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and Richelieu Hardware 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 Richelieu Hardware are associated (or correlated) with Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Richelieu Hardware i.e., Richelieu Hardware and Nicola Mining go up and down completely randomly.

Pair Corralation between Richelieu Hardware and Nicola Mining

Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 64.56 times less return on investment than Nicola Mining. But when comparing it to its historical volatility, Richelieu Hardware is 4.87 times less risky than Nicola Mining. It trades about 0.0 of its potential returns per unit of risk. Nicola Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Nicola Mining on November 26, 2024 and sell it today you would earn a total of  0.00  from holding Nicola Mining or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Richelieu Hardware  vs.  Nicola Mining

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510152025
JavaScript chart by amCharts 3.21.15RCH NIM
       Timeline  
Richelieu Hardware 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Richelieu Hardware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3637383940414243
Nicola Mining 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Nicola Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nicola Mining showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.240.260.280.30.320.340.36

Richelieu Hardware and Nicola Mining Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.6-1.95-1.3-0.64-0.01040.61.221.842.463.08 0.050.100.15
JavaScript chart by amCharts 3.21.15RCH NIM
       Returns  

Pair Trading with Richelieu Hardware and Nicola Mining

The main advantage of trading using opposite Richelieu Hardware and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware position performs unexpectedly, Nicola Mining 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 Nicola Mining will offset losses from the drop in Nicola Mining's long position.
The idea behind Richelieu Hardware and Nicola Mining 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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