Correlation Between Alderan Resources and MFF Capital

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

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

Diversification Opportunities for Alderan Resources and MFF Capital

-0.82

Correlation Coefficient

Alderan Resources  MFF Capital

Pay attention - limited upside

The 3 months correlation between Alderan and MFF is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alderan Resources and MFF Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFF Capital Investments and Alderan 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 Alderan Resources are associated (or correlated) with MFF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFF Capital Investments has no effect on the direction of Alderan Resources i.e., Alderan Resources and MFF Capital go up and down completely randomly.

Pair Corralation between Alderan Resources and MFF Capital

Assuming the 90 days trading horizon Alderan Resources is expected to generate 9.79 times more return on investment than MFF Capital. However, Alderan Resources is 9.79 times more volatile than MFF Capital Investments. It trades about 0.02 of its potential returns per unit of risk. MFF Capital Investments is currently generating about 0.15 per unit of risk. If you would invest  8.00  in Alderan Resources on October 4, 2024 and sell it today you would lose (5.80) from holding Alderan Resources or give up 72.5% of portfolio value over 90 days.

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

Alderan Resources  vs.  MFF Capital Investments

Alderan Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alderan Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MFF Capital Investments

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MFF Capital Investments are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, MFF Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alderan Resources and MFF Capital

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

The idea behind Alderan Resources and MFF Capital Investments 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 Commodity Directory module to find actively traded commodities issued by global exchanges.