Correlation Between Sayona Mining and Nouveau Monde

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

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

Diversification Opportunities for Sayona Mining and Nouveau Monde

-0.73

Correlation Coefficient

Sayona Mining  Nouveau Monde

Pay attention - limited upside

The 3 months correlation between Sayona and Nouveau is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sayona Mining Limited 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 Sayona Mining 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 Sayona Mining Limited 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 Sayona Mining i.e., Sayona Mining and Nouveau Monde go up and down completely randomly.

Pair Corralation between Sayona Mining and Nouveau Monde

Assuming the 90 days horizon Sayona Mining Limited is expected to under-perform the Nouveau Monde. In addition to that, Sayona Mining is 1.07 times more volatile than Nouveau Monde Graphite. It trades about -0.04 of its total potential returns per unit of risk. Nouveau Monde Graphite is currently generating about 0.1 per unit of volatility. If you would invest  124.00  in Nouveau Monde Graphite on December 1, 2024 and sell it today you would earn a total of  36.00  from holding Nouveau Monde Graphite or generate 29.03% return on investment over 90 days.

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

Sayona Mining Limited  vs.  Nouveau Monde Graphite

Sayona Mining Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sayona Mining Limited 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nouveau Monde Graphite

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nouveau Monde Graphite are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Nouveau Monde reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sayona Mining and Nouveau Monde

The main advantage of trading using opposite Sayona Mining and Nouveau Monde positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sayona Mining 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 Sayona Mining Limited 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.