Correlation Between Fathom Nickel and Azimut Exploration

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

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

Diversification Opportunities for Fathom Nickel and Azimut Exploration

-0.62

Correlation Coefficient

Fathom Nickel  Azimut Exploration

Excellent diversification

The 3 months correlation between Fathom and Azimut is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Fathom Nickel and Azimut Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azimut Exploration and Fathom Nickel 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 Fathom Nickel are associated (or correlated) with Azimut Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azimut Exploration has no effect on the direction of Fathom Nickel i.e., Fathom Nickel and Azimut Exploration go up and down completely randomly.

Pair Corralation between Fathom Nickel and Azimut Exploration

Assuming the 90 days horizon Fathom Nickel is expected to under-perform the Azimut Exploration. But the otc stock apears to be less risky and, when comparing its historical volatility, Fathom Nickel is 1.1 times less risky than Azimut Exploration. The otc stock trades about -0.05 of its potential returns per unit of risk. The Azimut Exploration is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Azimut Exploration on September 4, 2024 and sell it today you would earn a total of  8.00  from holding Azimut Exploration or generate 21.05% return on investment over 90 days.

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

Fathom Nickel  vs.  Azimut Exploration

Fathom Nickel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fathom Nickel 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 fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Azimut Exploration

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Azimut Exploration are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Azimut Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fathom Nickel and Azimut Exploration

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

The idea behind Fathom Nickel and Azimut Exploration 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.