Correlation Between Apex Mining and Manila Mining

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

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

Diversification Opportunities for Apex Mining and Manila Mining

0.62

Correlation Coefficient

Apex Mining  Manila Mining

Poor diversification

The 3 months correlation between Apex and Manila is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Apex Mining Co and Manila Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manila Mining Corp and Apex Mining 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 Apex Mining Co are associated (or correlated) with Manila Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manila Mining Corp has no effect on the direction of Apex Mining i.e., Apex Mining and Manila Mining go up and down completely randomly.

Pair Corralation between Apex Mining and Manila Mining

Assuming the 90 days trading horizon Apex Mining is expected to generate 4.67 times less return on investment than Manila Mining. But when comparing it to its historical volatility, Apex Mining Co is 3.56 times less risky than Manila Mining. It trades about 0.28 of its potential returns per unit of risk. Manila Mining Corp is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  0.27  in Manila Mining Corp on December 30, 2024 and sell it today you would earn a total of  0.49  from holding Manila Mining Corp or generate 181.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	64.52%
Values	Daily Returns

Apex Mining Co  vs.  Manila Mining Corp

Apex Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Mining Co are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Apex Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Manila Mining Corp

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Manila Mining Corp are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Manila Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apex Mining and Manila Mining

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

The idea behind Apex Mining Co and Manila Mining 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.