Correlation Between Nicola Mining and MedMira

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

By analyzing existing cross correlation between Nicola Mining and MedMira, you can compare the effects of market volatilities on Nicola Mining and MedMira 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 MedMira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicola Mining and MedMira.

Diversification Opportunities for Nicola Mining and MedMira

0.28

Correlation Coefficient

Nicola Mining  MedMira

Modest diversification

The 3 months correlation between Nicola and MedMira is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and MedMira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedMira 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 MedMira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedMira has no effect on the direction of Nicola Mining i.e., Nicola Mining and MedMira go up and down completely randomly.

Pair Corralation between Nicola Mining and MedMira

Assuming the 90 days horizon Nicola Mining is expected to under-perform the MedMira. But the stock apears to be less risky and, when comparing its historical volatility, Nicola Mining is 1.31 times less risky than MedMira. The stock trades about -0.02 of its potential returns per unit of risk. The MedMira is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  9.00  in MedMira on September 13, 2024 and sell it today you would lose (1.00) from holding MedMira or give up 11.11% of portfolio value over 90 days.

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

Nicola Mining  vs.  MedMira

Nicola Mining

Risk-Adjusted Performance

0 of 100

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 fairly stable basic indicators, Nicola Mining is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

MedMira

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MedMira has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, MedMira is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nicola Mining and MedMira

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

The idea behind Nicola Mining and MedMira 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.