Correlation Between River Tech and Nordic Mining

Can any of the company-specific risk be diversified away by investing in both River Tech and Nordic 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 River Tech and Nordic Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between River Tech plc and Nordic Mining ASA, you can compare the effects of market volatilities on River Tech and Nordic 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 River Tech with a short position of Nordic Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of River Tech and Nordic Mining.

Diversification Opportunities for River Tech and Nordic Mining

0.05

Correlation Coefficient

River Tech  Nordic Mining

Significant diversification

The 3 months correlation between River and Nordic is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding River Tech plc and Nordic Mining ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Mining ASA and River Tech 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 River Tech plc are associated (or correlated) with Nordic Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Mining ASA has no effect on the direction of River Tech i.e., River Tech and Nordic Mining go up and down completely randomly.

Pair Corralation between River Tech and Nordic Mining

Assuming the 90 days trading horizon River Tech plc is expected to under-perform the Nordic Mining. In addition to that, River Tech is 2.33 times more volatile than Nordic Mining ASA. It trades about -0.11 of its total potential returns per unit of risk. Nordic Mining ASA is currently generating about 0.03 per unit of volatility. If you would invest  2,399  in Nordic Mining ASA on September 4, 2024 and sell it today you would earn a total of  49.00  from holding Nordic Mining ASA or generate 2.04% return on investment over 90 days.

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

River Tech plc  vs.  Nordic Mining ASA

River Tech plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days River Tech plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Nordic Mining ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Mining ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, Nordic Mining is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with River Tech and Nordic Mining

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

The idea behind River Tech plc and Nordic Mining ASA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.