Correlation Between Nouveau Monde and Global Atomic

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

By analyzing existing cross correlation between Nouveau Monde Graphite and Global Atomic Corp, you can compare the effects of market volatilities on Nouveau Monde and Global Atomic 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 Nouveau Monde with a short position of Global Atomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nouveau Monde and Global Atomic.

Diversification Opportunities for Nouveau Monde and Global Atomic

0.42

Correlation Coefficient

Nouveau Monde  Global Atomic

Very weak diversification

The 3 months correlation between Nouveau and Global is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nouveau Monde Graphite and Global Atomic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Atomic Corp and Nouveau Monde 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 Nouveau Monde Graphite are associated (or correlated) with Global Atomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Atomic Corp has no effect on the direction of Nouveau Monde i.e., Nouveau Monde and Global Atomic go up and down completely randomly.

Pair Corralation between Nouveau Monde and Global Atomic

Considering the 90-day investment horizon Nouveau Monde Graphite is expected to under-perform the Global Atomic. But the stock apears to be less risky and, when comparing its historical volatility, Nouveau Monde Graphite is 1.73 times less risky than Global Atomic. The stock trades about -0.1 of its potential returns per unit of risk. The Global Atomic Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Global Atomic Corp on September 3, 2024 and sell it today you would lose (11.00) from holding Global Atomic Corp or give up 12.5% of portfolio value over 90 days.

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

Nouveau Monde Graphite  vs.  Global Atomic Corp

Nouveau Monde Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nouveau Monde Graphite 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 primary 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.

Global Atomic Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Atomic Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nouveau Monde and Global Atomic

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

The idea behind Nouveau Monde Graphite and Global Atomic Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.