Correlation Between Avi and Mantengu Mining

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

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

Diversification Opportunities for Avi and Mantengu Mining

-0.35

Correlation Coefficient

Avi  Mantengu Mining

Very good diversification

The 3 months correlation between Avi and Mantengu is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Avi and Mantengu Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mantengu Mining and Avi 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 Avi are associated (or correlated) with Mantengu Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mantengu Mining has no effect on the direction of Avi i.e., Avi and Mantengu Mining go up and down completely randomly.

Pair Corralation between Avi and Mantengu Mining

Assuming the 90 days trading horizon Avi is expected to generate 4.8 times less return on investment than Mantengu Mining. But when comparing it to its historical volatility, Avi is 9.61 times less risky than Mantengu Mining. It trades about 0.06 of its potential returns per unit of risk. Mantengu Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  100,000  in Mantengu Mining on September 24, 2024 and sell it today you would lose (93,000) from holding Mantengu Mining or give up 93.0% of portfolio value over 90 days.

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

Avi  vs.  Mantengu Mining

Avi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Avi is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Mantengu Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mantengu Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mantengu Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Avi and Mantengu Mining

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

The idea behind Avi and Mantengu 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.