Correlation Between Nicola Mining and Richelieu Hardware

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

Diversification Opportunities for Nicola Mining and Richelieu Hardware

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Nicola and Richelieu is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and Richelieu Hardware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richelieu Hardware 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 Richelieu Hardware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richelieu Hardware has no effect on the direction of Nicola Mining i.e., Nicola Mining and Richelieu Hardware go up and down completely randomly.

Pair Corralation between Nicola Mining and Richelieu Hardware

Assuming the 90 days horizon Nicola Mining is expected to under-perform the Richelieu Hardware. In addition to that, Nicola Mining is 2.94 times more volatile than Richelieu Hardware. It trades about -0.07 of its total potential returns per unit of risk. Richelieu Hardware is currently generating about 0.05 per unit of volatility. If you would invest  3,857  in Richelieu Hardware on September 4, 2024 and sell it today you would earn a total of  171.00  from holding Richelieu Hardware or generate 4.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

Nicola Mining  vs.  Richelieu Hardware

 Performance 
       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 unfluctuating 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.
Richelieu Hardware 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Richelieu Hardware are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Richelieu Hardware is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nicola Mining and Richelieu Hardware Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nicola Mining and Richelieu Hardware

The main advantage of trading using opposite Nicola Mining and Richelieu Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nicola Mining position performs unexpectedly, Richelieu Hardware 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 Richelieu Hardware will offset losses from the drop in Richelieu Hardware's long position.
The idea behind Nicola Mining and Richelieu Hardware 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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