Correlation Between Minnova Corp and Amex Exploration

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

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

Diversification Opportunities for Minnova Corp and Amex Exploration

-0.09

Correlation Coefficient

Minnova Corp  Amex Exploration

Good diversification

The 3 months correlation between Minnova and Amex is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Minnova Corp and Amex Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amex Exploration and Minnova Corp 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 Minnova Corp are associated (or correlated) with Amex Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amex Exploration has no effect on the direction of Minnova Corp i.e., Minnova Corp and Amex Exploration go up and down completely randomly.

Pair Corralation between Minnova Corp and Amex Exploration

Assuming the 90 days horizon Minnova Corp is expected to generate 69.74 times more return on investment than Amex Exploration. However, Minnova Corp is 69.74 times more volatile than Amex Exploration. It trades about 0.2 of its potential returns per unit of risk. Amex Exploration is currently generating about -0.05 per unit of risk. If you would invest  0.21  in Minnova Corp on September 13, 2024 and sell it today you would lose (0.20) from holding Minnova Corp or give up 95.24% of portfolio value over 90 days.

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

Minnova Corp  vs.  Amex Exploration

Minnova Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Minnova Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Minnova Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Amex Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amex Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and 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 Minnova Corp and Amex Exploration

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

The idea behind Minnova Corp and Amex Exploration 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.