Correlation Between Foraco International and Nicola Mining
Can any of the company-specific risk be diversified away by investing in both Foraco International 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 Foraco International and Nicola Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foraco International SA and Nicola Mining, you can compare the effects of market volatilities on Foraco International 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 Foraco International with a short position of Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foraco International and Nicola Mining.
Diversification Opportunities for Foraco International and Nicola Mining
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Foraco and Nicola is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Foraco International SA and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining and Foraco International 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 Foraco International SA 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 Foraco International i.e., Foraco International and Nicola Mining go up and down completely randomly.
Pair Corralation between Foraco International and Nicola Mining
Assuming the 90 days trading horizon Foraco International SA is expected to generate 0.72 times more return on investment than Nicola Mining. However, Foraco International SA is 1.39 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 227.00 in Foraco International SA on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Foraco International SA or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foraco International SA vs. Nicola Mining
Performance |
| Timeline |
| Foraco International |
| Nicola Mining |
Foraco International and Nicola Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foraco International and Nicola Mining
The main advantage of trading using opposite Foraco International and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foraco International 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.| Foraco International vs. Orbit Garant Drilling | Foraco International vs. Geodrill Limited | Foraco International vs. Mccoy Global | Foraco International vs. Bri Chem Corp |
| Nicola Mining vs. Foraco International SA | Nicola Mining vs. Geodrill Limited | Nicola Mining vs. Major Drilling Group | Nicola Mining vs. Bri Chem Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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