Correlation Between Asiabasemetals and Midnight Sun

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

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

Diversification Opportunities for Asiabasemetals and Midnight Sun

-0.12

Correlation Coefficient

Asiabasemetals  Midnight Sun

Good diversification

The 3 months correlation between Asiabasemetals and Midnight is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Asiabasemetals and Midnight Sun Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midnight Sun Mining and Asiabasemetals 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 Asiabasemetals are associated (or correlated) with Midnight Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midnight Sun Mining has no effect on the direction of Asiabasemetals i.e., Asiabasemetals and Midnight Sun go up and down completely randomly.

Pair Corralation between Asiabasemetals and Midnight Sun

Assuming the 90 days horizon Asiabasemetals is expected to generate 1.05 times less return on investment than Midnight Sun. In addition to that, Asiabasemetals is 1.56 times more volatile than Midnight Sun Mining. It trades about 0.03 of its total potential returns per unit of risk. Midnight Sun Mining is currently generating about 0.05 per unit of volatility. If you would invest  40.00  in Midnight Sun Mining on September 15, 2024 and sell it today you would earn a total of  3.00  from holding Midnight Sun Mining or generate 7.5% return on investment over 90 days.

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

Asiabasemetals  vs.  Midnight Sun Mining

Asiabasemetals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asiabasemetals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Asiabasemetals showed solid returns over the last few months and may actually be approaching a breakup point.

Midnight Sun Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Midnight Sun Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Midnight Sun showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asiabasemetals and Midnight Sun

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

The idea behind Asiabasemetals and Midnight Sun Mining 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.