Correlation Between Northern Superior and Radisson Mining

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

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

Diversification Opportunities for Northern Superior and Radisson Mining

-0.04

Correlation Coefficient

Northern Superior  Radisson Mining

Good diversification

The 3 months correlation between Northern and Radisson is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Northern Superior Resources and Radisson Mining Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radisson Mining Resources and Northern Superior 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 Northern Superior Resources are associated (or correlated) with Radisson Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radisson Mining Resources has no effect on the direction of Northern Superior i.e., Northern Superior and Radisson Mining go up and down completely randomly.

Pair Corralation between Northern Superior and Radisson Mining

Assuming the 90 days horizon Northern Superior Resources is expected to under-perform the Radisson Mining. In addition to that, Northern Superior is 1.09 times more volatile than Radisson Mining Resources. It trades about -0.22 of its total potential returns per unit of risk. Radisson Mining Resources is currently generating about -0.11 per unit of volatility. If you would invest  25.00  in Radisson Mining Resources on February 17, 2025 and sell it today you would lose (2.00) from holding Radisson Mining Resources or give up 8.0% of portfolio value over 90 days.

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

Northern Superior Resources  vs.  Radisson Mining Resources

Northern Superior

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Superior Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northern Superior reported solid returns over the last few months and may actually be approaching a breakup point.

Radisson Mining Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Radisson Mining Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Northern Superior and Radisson Mining

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

The idea behind Northern Superior Resources and Radisson Mining Resources 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.