Correlation Between Tinka Resources and NVE

Can any of the company-specific risk be diversified away by investing in both Tinka Resources and NVE 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 NVE 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 NVE Corporation, you can compare the effects of market volatilities on Tinka Resources and NVE 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 NVE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tinka Resources and NVE.

Diversification Opportunities for Tinka Resources and NVE

-0.21

Correlation Coefficient

Tinka Resources  NVE

Very good diversification

The 3 months correlation between Tinka and NVE is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tinka Resources Limited and NVE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVE Corporation 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 NVE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVE Corporation has no effect on the direction of Tinka Resources i.e., Tinka Resources and NVE go up and down completely randomly.

Pair Corralation between Tinka Resources and NVE

Assuming the 90 days horizon Tinka Resources Limited is expected to generate 2.46 times more return on investment than NVE. However, Tinka Resources is 2.46 times more volatile than NVE Corporation. It trades about 0.01 of its potential returns per unit of risk. NVE Corporation is currently generating about 0.03 per unit of risk. If you would invest  12.00  in Tinka Resources Limited on October 4, 2024 and sell it today you would lose (5.00) from holding Tinka Resources Limited or give up 41.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Tinka Resources Limited  vs.  NVE 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.

NVE Corporation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVE Corporation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, NVE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tinka Resources and NVE

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

The idea behind Tinka Resources Limited and NVE Corporation 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.