Correlation Between SPC Nickel and Emerita Resources

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

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

Diversification Opportunities for SPC Nickel and Emerita Resources

0.81

Correlation Coefficient

SPC Nickel  Emerita Resources

Very poor diversification

The 3 months correlation between SPC and Emerita is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SPC Nickel Corp and Emerita Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerita Resources Corp and SPC Nickel 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 SPC Nickel Corp are associated (or correlated) with Emerita Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerita Resources Corp has no effect on the direction of SPC Nickel i.e., SPC Nickel and Emerita Resources go up and down completely randomly.

Pair Corralation between SPC Nickel and Emerita Resources

Assuming the 90 days horizon SPC Nickel is expected to generate 1.44 times less return on investment than Emerita Resources. In addition to that, SPC Nickel is 2.98 times more volatile than Emerita Resources Corp. It trades about 0.01 of its total potential returns per unit of risk. Emerita Resources Corp is currently generating about 0.05 per unit of volatility. If you would invest  39.00  in Emerita Resources Corp on September 3, 2024 and sell it today you would earn a total of  8.00  from holding Emerita Resources Corp or generate 20.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.32%
Values	Daily Returns

SPC Nickel Corp  vs.  Emerita Resources Corp

SPC Nickel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPC Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Emerita Resources Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emerita Resources Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Emerita Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SPC Nickel and Emerita Resources

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

The idea behind SPC Nickel Corp and Emerita Resources Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.