Correlation Between Sigma Lithium and FPX Nickel

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

By analyzing existing cross correlation between Sigma Lithium Resources and FPX Nickel Corp, you can compare the effects of market volatilities on Sigma Lithium and FPX Nickel 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 Sigma Lithium with a short position of FPX Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Lithium and FPX Nickel.

Diversification Opportunities for Sigma Lithium and FPX Nickel

-0.31

Correlation Coefficient

Sigma Lithium  FPX Nickel

Very good diversification

The 3 months correlation between Sigma and FPX is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Lithium Resources and FPX Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPX Nickel Corp and Sigma Lithium 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 Sigma Lithium Resources are associated (or correlated) with FPX Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPX Nickel Corp has no effect on the direction of Sigma Lithium i.e., Sigma Lithium and FPX Nickel go up and down completely randomly.

Pair Corralation between Sigma Lithium and FPX Nickel

Assuming the 90 days trading horizon Sigma Lithium Resources is expected to under-perform the FPX Nickel. In addition to that, Sigma Lithium is 2.08 times more volatile than FPX Nickel Corp. It trades about -0.02 of its total potential returns per unit of risk. FPX Nickel Corp is currently generating about 0.01 per unit of volatility. If you would invest  25.00  in FPX Nickel Corp on April 22, 2025 and sell it today you would earn a total of  0.00  from holding FPX Nickel Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Sigma Lithium Resources  vs.  FPX Nickel Corp

Sigma Lithium Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sigma Lithium Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

FPX Nickel Corp

Risk-Adjusted Performance

Weak

Over the last 90 days FPX Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, FPX Nickel is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sigma Lithium and FPX Nickel

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

The idea behind Sigma Lithium Resources and FPX Nickel Corp 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.