Correlation Between SPC Nickel and Lotus Resources
Can any of the company-specific risk be diversified away by investing in both SPC Nickel and Lotus 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 SPC Nickel and Lotus Resources 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 Lotus Resources Limited, you can compare the effects of market volatilities on SPC Nickel and Lotus 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 SPC Nickel with a short position of Lotus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPC Nickel and Lotus Resources.
Diversification Opportunities for SPC Nickel and Lotus Resources
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPC and Lotus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SPC Nickel Corp and Lotus Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Resources 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 Lotus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Resources has no effect on the direction of SPC Nickel i.e., SPC Nickel and Lotus Resources go up and down completely randomly.
Pair Corralation between SPC Nickel and Lotus Resources
Assuming the 90 days horizon SPC Nickel Corp is expected to under-perform the Lotus Resources. In addition to that, SPC Nickel is 1.74 times more volatile than Lotus Resources Limited. It trades about -0.38 of its total potential returns per unit of risk. Lotus Resources Limited is currently generating about -0.07 per unit of volatility. If you would invest 18.00 in Lotus Resources Limited on August 29, 2024 and sell it today you would lose (2.00) from holding Lotus Resources Limited or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPC Nickel Corp vs. Lotus Resources Limited
Performance |
| Timeline |
| SPC Nickel Corp |
| Lotus Resources |
SPC Nickel and Lotus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPC Nickel and Lotus Resources
The main advantage of trading using opposite SPC Nickel and Lotus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPC Nickel position performs unexpectedly, Lotus 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 Lotus Resources will offset losses from the drop in Lotus Resources' long position.| SPC Nickel vs. Rockridge Resources | SPC Nickel vs. Vital Metals Limited | SPC Nickel vs. Ameriwest Lithium | SPC Nickel vs. Osisko Metals Incorporated |
| Lotus Resources vs. Filo Mining Corp | Lotus Resources vs. Golden Goliath Resources | Lotus Resources vs. Stria Lithium | Lotus Resources vs. Monitor Ventures |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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