Correlation Between Minetech Resources and Eco World

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

By analyzing existing cross correlation between Minetech Resources Bhd and Eco World Develop, you can compare the effects of market volatilities on Minetech Resources and Eco World 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 Minetech Resources with a short position of Eco World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minetech Resources and Eco World.

Diversification Opportunities for Minetech Resources and Eco World

0.21

Correlation Coefficient

Minetech Resources  Eco World

Modest diversification

The 3 months correlation between Minetech and Eco is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Minetech Resources Bhd and Eco World Develop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco World Develop and Minetech Resources 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 Minetech Resources Bhd are associated (or correlated) with Eco World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco World Develop has no effect on the direction of Minetech Resources i.e., Minetech Resources and Eco World go up and down completely randomly.

Pair Corralation between Minetech Resources and Eco World

Assuming the 90 days trading horizon Minetech Resources is expected to generate 3.55 times less return on investment than Eco World. In addition to that, Minetech Resources is 1.86 times more volatile than Eco World Develop. It trades about 0.02 of its total potential returns per unit of risk. Eco World Develop is currently generating about 0.14 per unit of volatility. If you would invest  156.00  in Eco World Develop on September 3, 2024 and sell it today you would earn a total of  33.00  from holding Eco World Develop or generate 21.15% return on investment over 90 days.

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

Minetech Resources Bhd  vs.  Eco World Develop

Minetech Resources Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Minetech Resources Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Minetech Resources is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Eco World Develop

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eco World Develop are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Eco World disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Minetech Resources and Eco World

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

The idea behind Minetech Resources Bhd and Eco World Develop 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.