Correlation Between Postmedia Network and Nicola Mining

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

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

Diversification Opportunities for Postmedia Network and Nicola Mining

0.6

Correlation Coefficient

Postmedia Network  Nicola Mining

Poor diversification

The 3 months correlation between Postmedia and Nicola is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and Postmedia Network 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 Postmedia Network Canada are associated (or correlated) with Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Postmedia Network i.e., Postmedia Network and Nicola Mining go up and down completely randomly.

Pair Corralation between Postmedia Network and Nicola Mining

Assuming the 90 days trading horizon Postmedia Network Canada is expected to generate 0.66 times more return on investment than Nicola Mining. However, Postmedia Network Canada is 1.51 times less risky than Nicola Mining. It trades about -0.04 of its potential returns per unit of risk. Nicola Mining is currently generating about -0.05 per unit of risk. If you would invest  137.00  in Postmedia Network Canada on September 11, 2024 and sell it today you would lose (12.00) from holding Postmedia Network Canada or give up 8.76% of portfolio value over 90 days.

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

Postmedia Network Canada  vs.  Nicola Mining

Postmedia Network Canada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Postmedia Network Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 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.

Pair Trading with Postmedia Network and Nicola Mining

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

The idea behind Postmedia Network Canada and Nicola Mining 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.