Correlation Between Nickel Creek and Kavango Resources
Can any of the company-specific risk be diversified away by investing in both Nickel Creek and Kavango Resources 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 Nickel Creek and Kavango Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nickel Creek Platinum and Kavango Resources Plc, you can compare the effects of market volatilities on Nickel Creek and Kavango Resources 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 Nickel Creek with a short position of Kavango Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Creek and Kavango Resources.
Diversification Opportunities for Nickel Creek and Kavango Resources
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nickel and Kavango is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Creek Platinum and Kavango Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kavango Resources Plc and Nickel Creek 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 Nickel Creek Platinum are associated (or correlated) with Kavango Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kavango Resources Plc has no effect on the direction of Nickel Creek i.e., Nickel Creek and Kavango Resources go up and down completely randomly.
Pair Corralation between Nickel Creek and Kavango Resources
Assuming the 90 days horizon Nickel Creek Platinum is expected to generate 23.38 times more return on investment than Kavango Resources. However, Nickel Creek is 23.38 times more volatile than Kavango Resources Plc. It trades about 0.14 of its potential returns per unit of risk. Kavango Resources Plc is currently generating about -0.03 per unit of risk. If you would invest 139.00 in Nickel Creek Platinum on September 3, 2024 and sell it today you would lose (82.00) from holding Nickel Creek Platinum or give up 58.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nickel Creek Platinum vs. Kavango Resources Plc
Performance |
| Timeline |
| Nickel Creek Platinum |
| Kavango Resources Plc |
Nickel Creek and Kavango Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nickel Creek and Kavango Resources
The main advantage of trading using opposite Nickel Creek and Kavango Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Creek position performs unexpectedly, Kavango Resources 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 Kavango Resources will offset losses from the drop in Kavango Resources' long position.| Nickel Creek vs. Ridgestone Mining | Nickel Creek vs. Focus Graphite | Nickel Creek vs. Jervois Mining | Nickel Creek vs. Altius Minerals |
| Kavango Resources vs. Qubec Nickel Corp | Kavango Resources vs. IGO Limited | Kavango Resources vs. Avarone Metals | Kavango Resources vs. Adriatic Metals PLC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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