Correlation Between Nicola Mining and Insteel Industries

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

By analyzing existing cross correlation between Nicola Mining and Insteel Industries, you can compare the effects of market volatilities on Nicola Mining and Insteel Industries 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 Nicola Mining with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicola Mining and Insteel Industries.

Diversification Opportunities for Nicola Mining and Insteel Industries

0.38

Correlation Coefficient

Nicola Mining  Insteel Industries

Weak diversification

The 3 months correlation between Nicola and Insteel is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nicola Mining and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and Nicola Mining 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 Nicola Mining are associated (or correlated) with Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Nicola Mining i.e., Nicola Mining and Insteel Industries go up and down completely randomly.

Pair Corralation between Nicola Mining and Insteel Industries

Assuming the 90 days horizon Nicola Mining is expected to generate 3.35 times more return on investment than Insteel Industries. However, Nicola Mining is 3.35 times more volatile than Insteel Industries. It trades about 0.25 of its potential returns per unit of risk. Insteel Industries is currently generating about 0.05 per unit of risk. If you would invest  26.00  in Nicola Mining on May 7, 2025 and sell it today you would earn a total of  33.00  from holding Nicola Mining or generate 126.92% return on investment over 90 days.

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

Nicola Mining  vs.  Insteel Industries

Nicola Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nicola Mining are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting forward indicators, Nicola Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Insteel Industries

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Insteel Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Insteel Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nicola Mining and Insteel Industries

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

The idea behind Nicola Mining and Insteel Industries 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.