Correlation Between First Majestic and Nocera

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

By analyzing existing cross correlation between First Majestic Silver and Nocera Inc, you can compare the effects of market volatilities on First Majestic and Nocera 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 First Majestic with a short position of Nocera. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Nocera.

Diversification Opportunities for First Majestic and Nocera

0.4

Correlation Coefficient

First Majestic  Nocera

Very weak diversification

The 3 months correlation between First and Nocera is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Nocera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nocera Inc and First Majestic 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 First Majestic Silver are associated (or correlated) with Nocera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nocera Inc has no effect on the direction of First Majestic i.e., First Majestic and Nocera go up and down completely randomly.

Pair Corralation between First Majestic and Nocera

Allowing for the 90-day total investment horizon First Majestic Silver is expected to generate 0.74 times more return on investment than Nocera. However, First Majestic Silver is 1.36 times less risky than Nocera. It trades about 0.08 of its potential returns per unit of risk. Nocera Inc is currently generating about -0.01 per unit of risk. If you would invest  555.00  in First Majestic Silver on January 16, 2025 and sell it today you would earn a total of  105.00  from holding First Majestic Silver or generate 18.92% return on investment over 90 days.

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

First Majestic Silver  vs.  Nocera Inc

First Majestic Silver

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, First Majestic reported solid returns over the last few months and may actually be approaching a breakup point.

Nocera Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nocera Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nocera is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Majestic and Nocera

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

The idea behind First Majestic Silver and Nocera Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.