Correlation Between Premium Nickel and Blue Moon

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

By analyzing existing cross correlation between Premium Nickel Resources and Blue Moon Metals, you can compare the effects of market volatilities on Premium Nickel and Blue Moon 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 Premium Nickel with a short position of Blue Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Nickel and Blue Moon.

Diversification Opportunities for Premium Nickel and Blue Moon

-0.41

Correlation Coefficient

Premium Nickel  Blue Moon

Very good diversification

The 3 months correlation between Premium and Blue is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Premium Nickel Resources and Blue Moon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Moon Metals and Premium Nickel 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 Premium Nickel Resources are associated (or correlated) with Blue Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Moon Metals has no effect on the direction of Premium Nickel i.e., Premium Nickel and Blue Moon go up and down completely randomly.

Pair Corralation between Premium Nickel and Blue Moon

Assuming the 90 days horizon Premium Nickel Resources is expected to under-perform the Blue Moon. But the pink sheet apears to be less risky and, when comparing its historical volatility, Premium Nickel Resources is 2.67 times less risky than Blue Moon. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Blue Moon Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3.95  in Blue Moon Metals on September 21, 2024 and sell it today you would earn a total of  21.05  from holding Blue Moon Metals or generate 532.91% return on investment over 90 days.

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

Premium Nickel Resources  vs.  Blue Moon Metals

Premium Nickel Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Nickel Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential 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.

Blue Moon Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blue Moon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premium Nickel and Blue Moon

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

The idea behind Premium Nickel Resources and Blue Moon Metals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.