Correlation Between Nicola Mining and American Hotel

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Can any of the company-specific risk be diversified away by investing in both Nicola Mining and American Hotel 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 Nicola Mining and American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nicola Mining and American Hotel Income, you can compare the effects of market volatilities on Nicola Mining and American Hotel 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 Nicola Mining with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicola Mining and American Hotel.

Diversification Opportunities for Nicola Mining and American Hotel

NicolaAmericanDiversified AwayNicolaAmericanDiversified Away100%
0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nicola and American is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income and Nicola 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 Nicola Mining are associated (or correlated) with American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Nicola Mining i.e., Nicola Mining and American Hotel go up and down completely randomly.

Pair Corralation between Nicola Mining and American Hotel

Assuming the 90 days horizon Nicola Mining is expected to under-perform the American Hotel. In addition to that, Nicola Mining is 1.03 times more volatile than American Hotel Income. It trades about -0.05 of its total potential returns per unit of risk. American Hotel Income is currently generating about 0.02 per unit of volatility. If you would invest  34.00  in American Hotel Income on September 12, 2024 and sell it today you would earn a total of  0.00  from holding American Hotel Income or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.44%
ValuesDaily Returns

Nicola Mining  vs.  American Hotel Income

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -20-1001020304050
JavaScript chart by amCharts 3.21.15NIM HOT-U
       Timeline  
Nicola Mining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nicola Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.240.260.280.30.320.34
American Hotel Income 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in American Hotel Income are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, American Hotel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.350.40.450.5

Nicola Mining and American Hotel Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.69-5.01-3.33-1.65-0.02661.543.144.746.337.93 0.0220.0230.0240.025
JavaScript chart by amCharts 3.21.15NIM HOT-U
       Returns  

Pair Trading with Nicola Mining and American Hotel

The main advantage of trading using opposite Nicola Mining and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nicola Mining position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel's long position.
The idea behind Nicola Mining and American Hotel Income 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 Stocks Directory module to find actively traded stocks across global markets.

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