Correlation Between Tinka Resources and FPX Nickel

Can any of the company-specific risk be diversified away by investing in both Tinka 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 Tinka 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 Tinka Resources Limited and FPX Nickel Corp, you can compare the effects of market volatilities on Tinka 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 Tinka Resources with a short position of FPX Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tinka Resources and FPX Nickel.

Diversification Opportunities for Tinka Resources and FPX Nickel

0.79

Correlation Coefficient

Tinka Resources  FPX Nickel

Poor diversification

The 3 months correlation between Tinka and FPX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tinka 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 Tinka 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 Tinka 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 Tinka Resources i.e., Tinka Resources and FPX Nickel go up and down completely randomly.

Pair Corralation between Tinka Resources and FPX Nickel

Assuming the 90 days horizon Tinka Resources Limited is expected to under-perform the FPX Nickel. In addition to that, Tinka Resources is 3.12 times more volatile than FPX Nickel Corp. It trades about -0.04 of its total potential returns per unit of risk. FPX Nickel Corp is currently generating about -0.08 per unit of volatility. If you would invest  18.00  in FPX Nickel Corp on October 9, 2024 and sell it today you would lose (1.00) from holding FPX Nickel Corp or give up 5.56% of portfolio value over 90 days.

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

Tinka Resources Limited  vs.  FPX Nickel Corp

Tinka Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Tinka Resources and FPX Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tinka 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 Tinka 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.