Correlation Between MOAB MINERALS and NIKKON HOLDINGS

Can any of the company-specific risk be diversified away by investing in both MOAB MINERALS and NIKKON HOLDINGS 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 MOAB MINERALS and NIKKON HOLDINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MOAB MINERALS LTD and NIKKON HOLDINGS TD, you can compare the effects of market volatilities on MOAB MINERALS and NIKKON HOLDINGS 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 MOAB MINERALS with a short position of NIKKON HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOAB MINERALS and NIKKON HOLDINGS.

Diversification Opportunities for MOAB MINERALS and NIKKON HOLDINGS

-0.41

Correlation Coefficient

MOAB MINERALS  NIKKON HOLDINGS

Very good diversification

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

Pair Corralation between MOAB MINERALS and NIKKON HOLDINGS

Assuming the 90 days trading horizon MOAB MINERALS LTD is expected to generate 33.28 times more return on investment than NIKKON HOLDINGS. However, MOAB MINERALS is 33.28 times more volatile than NIKKON HOLDINGS TD. It trades about 0.06 of its potential returns per unit of risk. NIKKON HOLDINGS TD is currently generating about 0.11 per unit of risk. If you would invest  0.10  in MOAB MINERALS LTD on September 23, 2024 and sell it today you would lose (0.05) from holding MOAB MINERALS LTD or give up 50.0% of portfolio value over 90 days.

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

MOAB MINERALS LTD  vs.  NIKKON HOLDINGS TD

MOAB MINERALS LTD

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MOAB MINERALS LTD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MOAB MINERALS reported solid returns over the last few months and may actually be approaching a breakup point.

NIKKON HOLDINGS TD

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NIKKON HOLDINGS TD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NIKKON HOLDINGS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MOAB MINERALS and NIKKON HOLDINGS

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

The idea behind MOAB MINERALS LTD and NIKKON HOLDINGS TD 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.