Correlation Between Northern Superior and Kore Mining

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

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

Diversification Opportunities for Northern Superior and Kore Mining

0.27

Correlation Coefficient

Northern Superior  Kore Mining

Modest diversification

The 3 months correlation between Northern and Kore is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Northern Superior Resources and Kore Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kore Mining and Northern Superior 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 Northern Superior Resources are associated (or correlated) with Kore Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kore Mining has no effect on the direction of Northern Superior i.e., Northern Superior and Kore Mining go up and down completely randomly.

Pair Corralation between Northern Superior and Kore Mining

Assuming the 90 days horizon Northern Superior Resources is expected to generate 0.2 times more return on investment than Kore Mining. However, Northern Superior Resources is 4.92 times less risky than Kore Mining. It trades about 0.08 of its potential returns per unit of risk. Kore Mining is currently generating about -0.08 per unit of risk. If you would invest  47.00  in Northern Superior Resources on October 7, 2024 and sell it today you would earn a total of  2.00  from holding Northern Superior Resources or generate 4.26% return on investment over 90 days.

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

Northern Superior Resources  vs.  Kore Mining

Northern Superior

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kore Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kore Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kore Mining 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 Northern Superior and Kore Mining

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

The idea behind Northern Superior Resources and Kore 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.