Correlation Between SPC Nickel and Grid Metals

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

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

Diversification Opportunities for SPC Nickel and Grid Metals

-0.09

Correlation Coefficient

SPC Nickel  Grid Metals

Good diversification

The 3 months correlation between SPC and Grid is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding SPC Nickel Corp and Grid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Metals Corp and SPC 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 SPC Nickel Corp are associated (or correlated) with Grid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Metals Corp has no effect on the direction of SPC Nickel i.e., SPC Nickel and Grid Metals go up and down completely randomly.

Pair Corralation between SPC Nickel and Grid Metals

Assuming the 90 days horizon SPC Nickel Corp is not expected to generate positive returns. Moreover, SPC Nickel is 1.94 times more volatile than Grid Metals Corp. It trades away all of its potential returns to assume current level of volatility. Grid Metals Corp is currently generating about -0.13 per unit of risk. If you would invest  3.00  in SPC Nickel Corp on September 12, 2024 and sell it today you would lose (0.50) from holding SPC Nickel Corp or give up 16.67% of portfolio value over 90 days.

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

SPC Nickel Corp  vs.  Grid Metals Corp

SPC Nickel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPC Nickel Corp 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.

Grid Metals Corp

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grid Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Grid Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPC Nickel and Grid Metals

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

The idea behind SPC Nickel Corp and Grid Metals 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.