Correlation Between SGS SA and NioCorp Developments
Can any of the company-specific risk be diversified away by investing in both SGS SA and NioCorp Developments 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 SGS SA and NioCorp Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SGS SA and NioCorp Developments Ltd, you can compare the effects of market volatilities on SGS SA and NioCorp Developments 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 SGS SA with a short position of NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of SGS SA and NioCorp Developments.
Diversification Opportunities for SGS SA and NioCorp Developments
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SGS and NioCorp is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SGS SA and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments and SGS SA 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 SGS SA are associated (or correlated) with NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of SGS SA i.e., SGS SA and NioCorp Developments go up and down completely randomly.
Pair Corralation between SGS SA and NioCorp Developments
Assuming the 90 days horizon SGS SA is expected to generate 45.41 times less return on investment than NioCorp Developments. But when comparing it to its historical volatility, SGS SA is 1.94 times less risky than NioCorp Developments. It trades about 0.01 of its potential returns per unit of risk. NioCorp Developments Ltd is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 154.00 in NioCorp Developments Ltd on November 3, 2024 and sell it today you would earn a total of 85.00 from holding NioCorp Developments Ltd or generate 55.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SGS SA vs. NioCorp Developments Ltd
Performance |
| Timeline |
| SGS SA |
| NioCorp Developments |
SGS SA and NioCorp Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SGS SA and NioCorp Developments
The main advantage of trading using opposite SGS SA and NioCorp Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SGS SA position performs unexpectedly, NioCorp Developments 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 NioCorp Developments will offset losses from the drop in NioCorp Developments' long position.| SGS SA vs. RLJ Lodging Trust | SGS SA vs. The Cheesecake Factory | SGS SA vs. Portillos | SGS SA vs. RCI Hospitality Holdings |
| NioCorp Developments vs. Definitive Healthcare Corp | NioCorp Developments vs. City Office REIT | NioCorp Developments vs. Taylor Morn Home | NioCorp Developments vs. Weibo 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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