Correlation Between Syrah Resources and FPX Nickel

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

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

Diversification Opportunities for Syrah Resources and FPX Nickel

0.29

Correlation Coefficient

Syrah Resources  FPX Nickel

Modest diversification

The 3 months correlation between Syrah and FPX is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Syrah Resources Limited and FPX Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPX Nickel Corp and Syrah Resources 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 Syrah Resources Limited are associated (or correlated) with FPX Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPX Nickel Corp has no effect on the direction of Syrah Resources i.e., Syrah Resources and FPX Nickel go up and down completely randomly.

Pair Corralation between Syrah Resources and FPX Nickel

Assuming the 90 days horizon Syrah Resources Limited is expected to generate 1.89 times more return on investment than FPX Nickel. However, Syrah Resources is 1.89 times more volatile than FPX Nickel Corp. It trades about 0.0 of its potential returns per unit of risk. FPX Nickel Corp is currently generating about -0.04 per unit of risk. If you would invest  17.00  in Syrah Resources Limited on September 3, 2024 and sell it today you would lose (3.00) from holding Syrah Resources Limited or give up 17.65% of portfolio value over 90 days.

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

Syrah Resources Limited  vs.  FPX Nickel Corp

Syrah Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Syrah Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Syrah Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

FPX Nickel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FPX Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Syrah Resources and FPX Nickel

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

The idea behind Syrah Resources Limited and FPX Nickel 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.