Correlation Between Northern Sphere and Alpha En

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

By analyzing existing cross correlation between Northern Sphere Mining and alpha En, you can compare the effects of market volatilities on Northern Sphere and Alpha En 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 Northern Sphere with a short position of Alpha En. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Sphere and Alpha En.

Diversification Opportunities for Northern Sphere and Alpha En

1.0

Correlation Coefficient

Northern Sphere  Alpha En

No risk reduction

The 3 months correlation between Northern and Alpha is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Northern Sphere Mining and alpha En in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alpha En and Northern Sphere 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 Northern Sphere Mining are associated (or correlated) with Alpha En. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alpha En has no effect on the direction of Northern Sphere i.e., Northern Sphere and Alpha En go up and down completely randomly.

Pair Corralation between Northern Sphere and Alpha En

If you would invest  0.01  in alpha En on September 23, 2024 and sell it today you would earn a total of  0.00  from holding alpha En or generate 0.0% return on investment over 90 days.

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

Northern Sphere Mining  vs.  alpha En

Northern Sphere Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Sphere Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Northern Sphere is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

alpha En

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days alpha En has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Alpha En is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Northern Sphere and Alpha En

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

The idea behind Northern Sphere Mining and alpha En 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.