Correlation Between Ressources Minieres and Nouveau Monde

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

By analyzing existing cross correlation between Ressources Minieres Radisson and Nouveau Monde Graphite, you can compare the effects of market volatilities on Ressources Minieres and Nouveau Monde 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 Ressources Minieres with a short position of Nouveau Monde. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ressources Minieres and Nouveau Monde.

Diversification Opportunities for Ressources Minieres and Nouveau Monde

0.53

Correlation Coefficient

Ressources Minieres  Nouveau Monde

Very weak diversification

The 3 months correlation between Ressources and Nouveau is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ressources Minieres Radisson and Nouveau Monde Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nouveau Monde Graphite and Ressources Minieres 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 Ressources Minieres Radisson are associated (or correlated) with Nouveau Monde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nouveau Monde Graphite has no effect on the direction of Ressources Minieres i.e., Ressources Minieres and Nouveau Monde go up and down completely randomly.

Pair Corralation between Ressources Minieres and Nouveau Monde

Assuming the 90 days horizon Ressources Minieres Radisson is expected to generate 1.26 times more return on investment than Nouveau Monde. However, Ressources Minieres is 1.26 times more volatile than Nouveau Monde Graphite. It trades about 0.07 of its potential returns per unit of risk. Nouveau Monde Graphite is currently generating about -0.04 per unit of risk. If you would invest  14.00  in Ressources Minieres Radisson on September 12, 2024 and sell it today you would earn a total of  16.00  from holding Ressources Minieres Radisson or generate 114.29% return on investment over 90 days.

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

Ressources Minieres Radisson  vs.  Nouveau Monde Graphite

Ressources Minieres

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ressources Minieres Radisson are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ressources Minieres showed solid returns over the last few months and may actually be approaching a breakup point.

Nouveau Monde Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nouveau Monde Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nouveau Monde is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ressources Minieres and Nouveau Monde

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

The idea behind Ressources Minieres Radisson and Nouveau Monde Graphite 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.