Correlation Between FPX Nickel and Manganese

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

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

Diversification Opportunities for FPX Nickel and Manganese

0.5

Correlation Coefficient

FPX Nickel  Manganese

Very weak diversification

The 3 months correlation between FPX and Manganese is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding FPX Nickel Corp and Manganese X Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manganese X Energy and FPX 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 FPX Nickel Corp are associated (or correlated) with Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manganese X Energy has no effect on the direction of FPX Nickel i.e., FPX Nickel and Manganese go up and down completely randomly.

Pair Corralation between FPX Nickel and Manganese

Assuming the 90 days horizon FPX Nickel Corp is expected to under-perform the Manganese. But the otc stock apears to be less risky and, when comparing its historical volatility, FPX Nickel Corp is 2.33 times less risky than Manganese. The otc stock trades about -0.02 of its potential returns per unit of risk. The Manganese X Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4.10  in Manganese X Energy on September 13, 2024 and sell it today you would lose (0.95) from holding Manganese X Energy or give up 23.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

FPX Nickel Corp  vs.  Manganese X Energy

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 nearly stable fundamental indicators, FPX Nickel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Manganese X Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manganese X Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Manganese may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FPX Nickel and Manganese

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

The idea behind FPX Nickel Corp and Manganese X Energy 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.